Real estate: housing loans close to 1000 billion euros – Borrow

Since 2000, household debt has almost tripled. Decoding

(LaVieImmo.com) – The love of the French for stone could be reduced to their debts. Taken as a whole, home loans to individuals weighed 971 billion euros in May, according to the latest data just published by the Bank of France. A level never reached so far. In May, this outstanding amount increased by just over 4 billion euros. At the current rate, the symbolic bar of 1000 billion euros could be crossed by the beginning of next year.

Since January 2000, outstanding home loans have increased 2.8 times from 256 to 971 billion euros. Two main phenomena explain this spectacular flight. First, the rapid rise in real estate prices in the former, which were multiplied by 2.4 over the same period according to the figures of INSEE and notaries.

To finance the purchase of a home, the French spend more and more debt. As a reminder, the overwhelming majority of households finance the purchase of an apartment or house by going into debt. For example, in the first half of 2018, 78% of real estate buyers in the Century 21 network went into debt to finance their project.

A real estate heritage that also exploded

If prices were able to reach such levels Summits are also because the French have seen their income increase but especially that they borrow more … over longer periods. From 2004 to 2018, the average duration of new real estate loans granted to individuals thus rose from 15.4 to 19.6 years, according to the Banque de France. The dramatic decline in borrowing rates has also inflated the purchasing power of households. Average interest rates, all durations combined, peaked at 5.6% in early 2000. They fell to 1.46% in May according to the CSA Housing Credit Observatory.

The second factor that explains the explosion in outstanding real estate loans is the change in the number of homeowners. In 2017, France had 57.7% of owners, against 55.9% in 2002 according to INSEE. However, over the same period, the population has increased by 6.8 million people.

However, if the French are more indebted than before, they also hold goods that are worth more. The gross property wealth of households (excluding land not built) reached 6757 billion euros at the end of 2016, according to INSEE. In 2000, it amounted to only 2583 billion euros. Household real estate badets will have grown at about the same rate as their real estate debt over the last 20 years.