Mortgage loans: the Bank of France urges not to slow down their issuance and to control refusals.

In a period of economic slack in the sector, the governor of the Bank of France, François Villeroy de Gallo, is seeking to better control deviations and is considering a "friendly procedure" in some cases.

The decline in the number of mortgages has not gone unnoticed by the Bank of France. On Friday, November 17, its head, François Villeroy de Gallo, demands that the French financial sector "ensure healthy financing for the French economy" and continue to provide mortgages. There was an urgent need for the sector due to the European Central Bank's interest rate policy, which has been dragging on for more than a year: with 9.2 billion euros of loans issued in September indicated the "bottom", according to the head.

"The failure rate of banks, with the same risk, should not increase. Let's be clear - this percentage is not measured accurately and certainly raises many interpretations and suspicions. There is a widespread feeling that it has increased,", notes the chapter as it opens the annual conference of the Authority for Control and Regulation (ACPR). However, the head does not see "any reason to do so" as he believes that the profitability and liquidity of banks should not be an obstacle.

"There is a general question of supply and that 'banks are no longer lending'", believes François Villeroy de Gallo. Even if it is exaggerated, it is disadvantageous to no one: not for banks and their image, not for the housing sector, as it may encourage self-censorship of borrowers, and not for the quality of the overall economic diagnosis. "It therefore seems necessary and useful to collectively monitor these failure rates more closely, ", he believes. Villeroy de Gallo is calling on banks and public authorities to "consider" opening a friendly procedure for "apparently liquid mortgages that have been rejected," similar to those in place for corporate loans.

In addition, the Governor of the Bank of France supported the norms of the General Council for Financial Stability (HCSF), which in September refused to relax the criteria for granting loans. These regulations limit loan terms to 25 years and their share of family income (maximum debt level of 35%) and have drawn criticism from bankers. However, Villeroy de Gallo reminded that they are "fulfilling their mission" to prevent overcrediting. He also notes that banks can violate these rules for 20% of loans, but they did so only 14.3% of the time in the third quarter. And he rebukes: "Using more flexibility instead of contestation is the best way for banks to increase lending. "

François Villeroy de Gallo notes in his letter that "over the past few months, demand for loans from families has fallen significantly due to rising interest rates [...] while real estate prices and housing supply have remained stable." "Bank advisors are always ready to listen to their clients to find solutions and provide responsible lending in this complex and limited area," she assures, adding that the industry "of course cooperates with public authorities to propose continuous improvements, especially in this important area for families".

On the whole, however, François Villeroy de Gallo welcomes the "great resilience" of the French financial sector, despite the "exceptionally high level of uncertainty". At the same time, as the share of fixed rates in mortgages in France slows for French banks, the increase in interest rates and the stabilization of the interest rate on Livret A have strengthened the profitability and solvency of French banks. Insurance companies have also benefited from higher interest rates, the head said. Unlike the French who would like a loan to buy an apartment or a house.