The production of housing loans reached nearly 21 billion euros in December, and competitions rose by 6.3% in one year … As the statistics of the Bank of France show, the banks have not really stopped credit. These numbers were surprising in principle because for more than a year, financial institutions have had to adapt to the recommendations of the High Council for Financial Stability (HCSF), a regulatory body chaired by the Minister of Economy and Finance, Bruno Le Mayor. These same recommendations have also become binding standards since January 1, exposing banks to penalties for non-compliance with established standards.
Thus, since the beginning of the year, the household effort rate – the share of net pre-tax income allocated to loan repayment – cannot exceed 35%. The term of the loan is limited to 25 years (27 years for off-plan purchases). In addition to Bercy’s exceptions – for 20% of credits – banks simultaneously took out outdated tools for passing files that became ineligible. By distributing their loan more, or by increasing their income.
Soft loan to consolidate your monthly payments
The system isn’t new, but the loan facility has had a second life in recent months. The thing was exceptional in 2020 because banks were able to accept files with 39% debt. For more than a year, they have been open to this type of arrangement”, explains Pierre Chabon, founder of the broker Brito, which has contributed to the production of more than 1 billion euros in credit in 2021. Loan homogeneity consists in combining all monthly loans with family payments to avoid over-indebtedness By reducing the amount of monthly payments for new credit over a certain period, the borrower can fulfill his old loans – for example consumer credit – before devoting himself entirely to repaying the newly subscribed loan. While ensuring that the debt ratio does not exceed 35% The reasoning is also valid for loans with Zero interest.
Take the example given by the broker Empruntis. Spouses buy real estate using a conventional loan (190,000 euros over 25 years at 1.4%) and an interest-free loan (60,000 euros over 22 years, with a grace period of 10 years) for a total amount of 250 thousand euros. Sans lissage de prêt, le couple doit donc rembourser dans un premier temps 751 euros, puis 10 ans après, il doit ajouter les 417 euros du prêt à taux zéro pour atteindre 1.168 euros au total, avant de retomber 351 euros a pour eaules Last few years. With the soft loan, the couple will repay €941 over the entire term of the loan. The mortgage repayment share will decrease when the subsidized loan is added to the process” explains the broker. Thus the banker will take into account a monthly payment of 941 euros, not 1168 euros.
Progressive loan for promising borrowers
By taking care of each borrower’s personal files, banks can offer so-called progressive loans with a fixed rate. As its name suggests, it is a programmed adjustment of monthly loan payments. Each year, the repayment amount increases by 1 or 2%, finally reaching the maximum at the end of the loan. Only, the initial monthly payment is taken into account when calculating the indebtedness.
An ideal arrangement for young borrowers wishing to adapt their credit repayments to the progression of income that will permeate their careers. Pierre Capon emphasizes: “Banks have so far been limited to very specific profiles such as civil servants, whose salary increase schedule is known in advance, and have extended this practice to many profiles whose career prospects are promising.” This system may also be suitable for rental investors who will be able to benefit each year from an increase in income thanks to the re-evaluation of the rental reference index.
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Example: a loan of €200,000 over 20 years at 1%, with an annual increase in monthly installments of 1%, the first installment is €838, the final withdrawal is €1,012. All this with an average monthly payment of 920 euros.
Rental income is now boosted
They, along with first-time buyers without input, are the main victims of the new HCSF standards. Rental investors account for one-fifth of the 20% exemption granted (that is, only 4% of total exemptions), and they have seen their share of the total loans granted decline. It must be said that until then, banks have frequently financed this type of project with 38%, 39%, or even 40% of debt. To fall below the 35% cap, investors had to adjust their ambitions downward.
Another difficulty, most banks take into account only 70% of rental income to form a credit profile. Reason: These cash inflows are considered unstable due to the risks of vacant rent, unpaid rent or apartment maintenance costs. Thus a 30% discount is applied.
However, there is good news: to continue to finance the project of investors, more and more banks take into account not 70%, but 90%, even 100% of rental income. Regional mutual funds of banks such as Caisse d’Epargne, Banque Populaire or Crédit Agricole have fallen, confirm market experts. Even national banks like BNP got into it. The result is clear: “This ceiling increase could lower the debt ratio by 4 or 5 points,” analyzes Sandrine Allonier, spokeswoman for broker VousFinancer.
Variable income is better calculated
To determine the debt ratio, banks primarily rely on net pre-tax fixed income. However, it can include variable income for employees, especially salespeople. Barring that, to take it into account, that revenue would have to be regular for 3 years, recalls Maël Bernier, communications director for broker Meilleurtaux. Here, too, institutions began to abolish this rule to take into account faster, sometimes even from the first year.
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