The governor of the Banque de France does not understand the rate of rejection of real estate loans

François Villeroy de Galhau believes that this rejection rate should not increase… and at the same time justifies the tightening of the rules for providing real estate loans.

Bolstered by rising rates, France’s financial sector must “ensure healthy financing of the French economy” and in particular continue to provide real estate loans, Bank of France Governor François Villeroy de Galhau said.

“The rejection rate of banks for the same risk should not increase. Let’s be clear that this rate is not precisely measured, and this undoubtedly justifies a number of interpretations and suspicions. There is a diffuse feeling that it has increased,” he noted. by the Governor at the opening of the annual conference of the Office for Prudential Review and Resolution (ACPR).

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The governor sees “no justification” for this, because the profitability and liquidity of banks should not be an obstacle, according to him. It “seems necessary and in the collective interest to better monitor these rejection rates,” while real estate lending fell to a “low point” of €9.2 billion in September, the level before the introduction of “ultra-accommodative” monetary policy in 2015.

Open a conciliation procedure

François Villeroy de Galhau is calling on banks and public authorities to “consider” opening conciliation proceedings for “apparently solvent real estate loans that would lead to rejection”, such as business loans.

The governor of the Bank of France defended the standards of the High Financial Stability Board (HCSF) – criticized by bankers – which limit the duration of loans and their weight in relation to household income, recalling that they had “fulfilled (their) mission” to stop over-indebtedness and that there was room for flexibility. More generally, François Villeroy de Galhau praised the “great resilience” of the French financial sector, despite “an extraordinary degree of uncertainty”.

Although the importance of fixed rates for real estate loans in France slows down the process for French banks, the increase in interest rates and the stabilization of the Livret A rate have strengthened the profitability and solvency of French banks. Insurance companies also benefited from the increase in rates, he noted.

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