Real estate credit: borrowers are now taking on record durations

Santa Claus is not giving gifts to borrowers at this end of the year. First, credit rates start to rise slightly, a first in months … Then, personal savings demanded by bankers are increasing at breakneck speed … But in addition, buyers must now take on debt. increasingly long periods of time to become an owner. This is the bitter observation made by the Housing Credit Observatory / CSA. On average, in November 2021, the loans taken out by real estate buyers last (very exactly) twenty years. That is to say 7 months more than in November 2020. “The average duration of loans has never been so high in the past”, affirms the observatory.

The extension of these durations, explain the authors of the study, has at least one virtue: it makes it possible to absorb (in part) the increases in house prices. By spreading their loan over longer years, households can indeed reduce their monthly payments … And thus remain in the nails of the rule of 35% of indebtedness, dictated by the High Council of Financial Stability (HCSF) to banks. The extension of terms also makes it possible to attenuate the impact of increases in the personal contribution rate required by bankers. However, the extension of the durations conceals an implacable reality: the cost of the operations does not weaken. On the contrary, since by increasing the repayment periods without lowering the rates or the prices of real estate… the cost of credit increases automatically. Over the first 11 months of 2021, the cost of operations increased by 4.4%, i.e. 4 times faster than salaries over this period. It now takes an average of 4.8 years of income for a household to make its real estate purchase, against 4.5 years in November 2020.

Loans over 20 years are becoming the norm

In this context, the shortest loans, less than 15 years, are now becoming very rare. In November, they already correspond only to 14.6% of the files processed by the banks. “This is the lowest percentage that the Observatory has had to know so far,” the authors are astonished. Conversely, the records of households who fall into debt between 20 and 25 years explode: they now represent 61% of loans, according to the Observatory. Another unprecedented record. The rates go up, the durations of the loans too, as well as the personal contribution required by the bankers: it is obviously not Saint-Nicolas who is visiting the borrowers this winter, but rather Father Fouettard.

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