Will the production of mortgage loans rebound in 2023 after a sharp decline in 2022?

After years of euphoria, the French real estate market is undergoing a turnaround. The continuous rise in interest rates, the low usury rates and the banks’ requirements concerning personal contributions are blocking financing. This has resulted in a fall in the volumes of loans granted by lending institutions. A rebound is however expected for 2023.

Home loan production slowed in a deteriorating environment

Compared to 2021, the number of real estate loans granted last year fell by around 4%,

According to industry professionals. The decline is directly linked to the tightening of financing conditions. According to a major local broker,

Average rates for loans taken out for more than 20 years jumped nearly 32% over one year.

Borrowed capital (excluding first-time buyers) increased by 12% during the period due to higher property prices. On the other hand, the volumes of contracts signed fell by 2% and 9% respectively for the acquisition of a principal residence and rental investments.

As in 2021, activity was driven by private sector employees, who represented 68% of borrowers (+1 point compared to 2021). Public sector employees account for 18% of subscribers to real estate loana stable figure over the two years.

  • To obtain the funds requested, households justify higher incomes, at 60,251 euros per year on average in 2022, compared to 58,610 euros in 2021 (+3%).
  • The personal contribution is also more substantial at 65,537 euros (+8,836 euros, or +16% in one year).
  • Now, its share of the total amount of the real estate loan is 15.9% (+1.5 points).

What rate for your project?

First-time buyers are particularly penalized

ImportantAccess to financing is particularly complex for first-time buyers, who are now indebted for 23 years and 4 months,

That is an extension of 6 months from one year to another. The rates offered to them for a main real estate loan are also on the rise:

  • +0.15 points for credits repayable over a maximum of 10 years, at 1%

+0.41 point for loans with a term between 21 and 25 years.

Even outside of a first-time accession, the lowest fixed rate applied to real estate loans taken out over 21 to 25 years has quadrupled in one year while that for loans with a duration of less than or equal to 10 years increased by 33%. If we consider all transactions, the average revisable rate for the shortest financing has increased by 30% in one year.

A rebound is hoped for the second half of 2023

During the first six months of 2023, professionals anticipate a continuation of the downward movement.

On the other hand, from the summer, an upturn is expected, under two conditions:

  1. The method of calculating wear rates is reformed, to move from a quarterly basis to a monthly basis. Requested by brokers, the measure is being studied by Banque de France.
  2. The development of innovative alternative mechanisms, in particular rental-accession, could boost the dynamics of the market.

Brokers are thus counting on a drop of -15% until the end of March, followed by stagnation in the spring, before progressing by 15% and 20% over the last two quarters.

To remember

  • The volumes of real estate loans fell in 2022, while the income of borrowers and the required personal contribution increased.
  • Financing difficulties particularly penalize first-time buyers.
  • A rebound in activity is expected in the second half of 2023.


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