The historic drop in interest rates in recent years has led many French households to take out loans to finance the purchase of a house or refinance previous loans.
French banks must exercise increased vigilance over the mortgage loans they grant to their customers or may be forced to provision a "capital surchargeFor non-conforming loans. This is the warning of the Governor of the Bank of France, François Villeroy de Galhau, this Tuesday, January 14.
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The historic fall in interest rates in recent years has led many French households to take out loans to finance the purchase of a home or refinance previous loans. In one year, mortgage loans in France increased by nearly 7%, pushing property prices and bringing household debt to record levels.
Faced with this risk of overheating, the High Council for Financial Stability recommended last month that repayments linked to a mortgage be strictly capped at 33% of household income and that the duration of a loan does not exceed 25 years . 5% of the credits indeed exceed this duration, notes the High Council.
This recommendation, underlined François Villeroy de Galhau, “applies to all new loans deposited since this month of January. This means, in short, that drifts must stop, and behaviors must change, quickly.Otherwise, he adds, "we would go to a capital surcharge for non-conforming loans, even if that is not my wish ”, he warned the actors of the financial center.
The Governor of the Banque de France also asked the banks to better manage their pricing so that their margins are sufficient "to cover the costs and risks associated with mortgage loans."
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