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Real estate credit: HCSF announcements!

Real estate credit: HCSF announcements!

Following numerous alarming messages from real estate professionals, the HCSF, chaired by Bruno Le Maire, Minister of the Economy, has delivered its verdict. The conditions for granting loans are being relaxed to a certain extent.

Reminder of previous rules

Until now, banks were required to scrupulously respect the rules governing the indebtedness of borrowers. The maximum authorized debt ratio is 35% and with a maximum duration of 25 years. They can derogate from these rules, on 20% of their files. Of this quantity of files, 80% had to concern main residence purchase projects. The remaining 20% is free to use, therefore generally for second home or rental investment projects.

To sum up :

  • Derogation of around 16% of production when the object is the main residence (80% of 20%),

  • Exemption up to 4% of free-to-use production (20% of 20%).

This ratio of files deemed “non-standard” was monitored quarterly and exceeding this could lead to penalties.

What changes in the decision of June 13, 2023?

Since the committee's decision on Tuesday, June 13, the HCSF has decided not to modify the major credit locks, which are the debt ratio and the duration of the loan; and no change is envisaged in the short term.

To provide banking institutions with flexibility, it was decided to leave more leeway in the granting of loans that do not comply with traditional standards. Thus, banks will still be able to waive 20% of their files, but this time with different ratios:

  • Derogation of around 14% of production when the object is the main residence (70% of 20%),

  • Exemption up to 6% of free-to-use production (30% of 20%).

The idea of the High Council is to improve access to real estate credit for investors. This flexibility is also notable in the control of these ratios by the ACPR (Prudential Control and Resolution Authority) since the banks will be able to manage these non-standard files over 3 quarters and no longer just one. This difference is important because it will allow banks to continue to lend, including in periods of high demand since seasonality is very present in the credit environment.

In addition, the monthly payment of the wear rate should continue until the end of the year according to the latest information, but this must be validated by the competent authorities.

What consequences?

Many housing and finance players fear that this is not enough. They hoped for more significant changes such as changes in the maximum authorized debt ratio, longer loan periods, a greater appreciation of the remainder to live or even a differential calculation of property charges.

In any case, these advances are a step in the right direction and will open up financing possibilities for a number of borrowers. So don't put off your projects until tomorrow, at the risk of missing opportunities, but on the contrary, come and meet financing specialists to be able to seize them. The France Credit team will be able to meet your needs.Contact us!