Real estate loan: the contribution requested by your bank explodes

Is real estate credit certainly the prerogative of the wealthiest families? According to the Cafpi broker network, the amount of borrowers’ personal contribution has never been higher. In the third quarter of 2022, the average contribution of new buyers reached € 60,039, an increase of around 20% in one year. A trend that affects all borrower profiles, including second-time buyers and investors. This surge in the average contribution should further complicate households’ access to credit, already weakened by inflation and the rise in interest rates.

Between the first quarter of 2021 and the third quarter of 2022, the average contribution of a first borrower therefore fell from € 48,803 to € 60,039. The average contribution rate – the share of the personal contribution on the total loan amount – also mechanically increased to reach 18%. The average contribution among second-time buyers also skyrockets, which still have better records: +16,000 euros between the first quarter of 2021 and the third quarter of 2022. The finding is the same among investors, even if the increase is slightly more moderate (+ 18% since the beginning of 2021).

The increase in the contribution makes it possible to respect the debt of 35%.

Several factors can explain these spectacular increases. From the beginning of the year, the household fatigue rate – the share of net income before tax destined for the repayment of a loan – can no longer exceed 35% (except 20% of the practices). A constraint dictated by the High Council for Financial Stability (HCSF), an organization under the aegis of Bercy. “In order to fall below the 35% debt threshold, families are forced to borrow smaller amounts and lower monthly installments by increasing the contribution level”, stresses Olivier Lendrevie, president of Cafpi.

The usury rate problem could also be responsible for increasing the amount of personal contributions. Please note that the usury rate is the effective maximum annual rate (total cost of credit) at which banks are authorized to grant loans. This maximum rate, which has been 3.05% since 1 October for loans of 20 years and over, is recalculated every three months by the Banque de France. But this famous usury rate is increasing more slowly than credit rates, which limits banks’ room for maneuver and prevents them from lending to as many people as possible. “Due to the usury rate, banks can no longer pass on the cost of money to their customers by raising rates. Rather than losing money by keeping rates low, some banks prefer to stop mortgage production. This causes a reduction in the supply of credit and only the best files still manage to obtain a loan ”, deplores Olivier Lendrevie. A phenomenon that mechanically increases the amount of the average contribution as the most fragile practices are now excluded from the credit market.

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Finally, the health crisis may have played a role in the explosion in contribution amounts. During the Covid crisis, household savings reached record levels, which helped improve the records of some borrowers.

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