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The real estate loans, which are at a level never seen in France, do they get too excited? Apprehensive in regards to the diploma to which households appear able to tackle debt immediately, the monetary authorities are asking banks to restrict their provide, with out but going by restrictive measures. The Excessive Council for Monetary Stability (HCSF), which incorporates the Ministry of Economic system and the Financial institution of France, really helpful Thursday banks to not grant actual property credit score over 25 years.
Dangers of “extreme debt”
The HCSF additionally asks them to not settle for instances wherein repayments would signify greater than one-third of family revenue. “We took immediately (…) measures of knowledge and prevention,” mentioned Francois Villeroy de Galhau, governor of the Financial institution of France, in a press release. “They’ll shield French households from the dangers of extreme debt attributable to their mortgage, whereas preserving their potential to homeownership.”
These bulletins mark a turning level for the monetary authorities, who till then had displayed their serenity within the face of a booming French housing market. The latter advantages from extraordinarily favorable credit score circumstances, which themselves have been fueled for years by the interventionist coverage of the European Central Financial institution (ECB), which has zero and even damaging charges.
Historic ground
French mortgage charges are themselves at their historic low, at simply over 1%. It’s, roughly talking, much like inflation, which is nearly equal to saying that one can acquire buying energy by borrowing. Compensation phrases are often unfold over a long time and the full quantity borrowed exceeded final yr's threshold of 1,000 billion euros.
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