Analysis and synthesis (Analyses et synthèses) no. 107: Housing financing in 2018
In a context of persistently low interest rates, the housing market was very dynamic in 2018 : the number of transactions reached a new historical peak of 970,000 sales, well above the average of 788,000 that had been observed since 2000, while the INSEE price index for existing property increased by 3.2 % in metropolitan France (+4.2 % in the Île-de-France region and +2.8 % in the Provinces).
In this flourishing environment, the annual production of housing loans amounted to EUR 203 billion in 2018, a figure that is still well above the annual average amount since 2003 (EUR 145 billion), although declining compared with 2017 (-26 %). This withdrawal is due to the decline in external loan transfers (-67 %), which decreased from 23.6 % of annual production in 2017 to 9.5 % in 2018 and has remained at that level in the first quarter of 2019. At the same time, the outstanding amount of housing loans exceeded the threshold of EUR 1,000 billion in 2018 (EUR 1,010 billion as of 31 December 2018), recording a growth of 5.8 % which continues in the first quarter of 2019.
Housing loans granted by French banks continue to be almost exclusively fixed-rate loans (98.5 % of production in 2018), thereby limiting the risks associated with a possible interest rates increase for households, while almost all outstanding amounts (96.9 %) are protected by collateral, mortgage or guarantee, which allows for a limitation of bank losses in case of borrower default. In addition to this, the credit provision policy is mainly based on the appreciation of the borrower's creditworthiness, which is measured using the debt service to income (DSTI) ratio rather than the value of the funded property.
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Updated on: 07/22/2020 16:53