Is the credit tap drying up? “The refusal rate of mortgage loan applications by banks rose from 9% at the end of 2019 to 16% in the third quarter of 2020”, observes Hervé Hatt, director of the credit broker Meilleurtaux.com. A sudden reluctance with no direct link to the Covid-19 epidemic.
Small step back. In December 2019, the High Council for Financial Stability (HCSF) called on banks to be cautious about the distribution of mortgage loans in order to protect households. This authority responsible for monitoring the financial system limits the duration of loans to twenty-five years and recalls that the borrower’s debt must remain below 33% of his income.
“By providing a uniform framework for risk-taking beyond what the banks are already doing, the HCSF recommendations limit the qualitative assessment of files carried out by the banks”, notes Vincent Menvielle, director of the offer at La Banque Postale. In other words, the networks can no longer make in the lace: the rule applies to all customers. And the recommendations of the HCSF continue to apply, although the lockdown put a natural halt to the production of credit between March and April.
“The debt ratio ceiling of 33% impacts all borrowers, regardless of their level of income”, summarizes Pierre Chapon, co-founder of the broker Pretto. It remains to find solutions to stay below the fateful bar. “When a client or a prospect presents a file showing a debt ratio higher than 33%, we can ask him to present a more important contribution, or to extend the duration within the limit of the ceiling of twenty-five years”, confirms Benjamin Leroy, head of commercial development in the personal market at Société Générale.
First-time buyers with modest incomes are primarily concerned. “The average contribution is up 8% in the first half of 2020”, confirms for his part Vincent Menvielle, at La Banque Postale, particularly present with customers in social home ownership. But the lack of contribution does not always close the door of the banks. “It is still possible to borrow without contribution on condition of respecting the maximum debt ratio of 33%”, confirms Maël Bernier, spokesperson for Meilleurtaux.com, who specifies that 37% of cases funded since May 11 have less than 5% contribution.
Sectors at risk
More unexpectedly, the recommendations of the HCSF impact wealthy clients, including investors, who can no longer exceed the debt ratio of 33%. “We could go up to 40% or 45% debt ratio for high income borrowers. From now on, half of the simulation requests made by investors on our site are no longer fundable, due to failure to respect the 33% threshold ”, notes Pierre Chapon.
Concretely, the HCSF does not take into account the “remainder to live” generally studied by the banks before granting a loan. Thus, a couple earning 10,000 euros per month can afford to repay 4,000 euros in credits since their remainder to live, of 6,000 euros in our example, is more than enough to cover their other needs. Yesterday, this file passed despite a debt ratio of 40%. This is no longer the case, except within the framework of exemptions authorized by the HCSF, within the limit of 15% of the files of each establishment.
Another difficulty for borrowers, the economic crisis is also prompting banks to be extra careful. Employees in particularly affected sectors such as tourism, hotels and aeronautics are already finding it more difficult to borrow. “Banks don’t have to justify their refusal. But our experience confirms that they have become more demanding for employees in high-risk sectors ”, adds Philippe Taboret, Deputy Managing Director of Cafpi. An opinion shared by Maël Bernier: “This caution is legitimate on the part of the banks and protects these customers who would risk finding themselves in complicated situations if they lost their jobs. “
Another disruptive factor, the new usury rate which went from 2.97% for loans over 20 years to 1is July 2019 at 2.57% today. This sharp drop automatically prohibits certain households from borrowing, because the effective rate (which includes the credit rate, the credit insurance rate and certain fees) offered by the banks exceeds the usury rate, which does not is not allowed. “This particularly excludes first-time buyers without a contribution, and seniors penalized by the weight of borrower insurance”, Philip Taboret is established.