The debt ratio of real estate loans increases to 35%!
Sale : The debt ratio of mortgages rises to 35%!
It was announced by the Minister of economy that the debt ratio and the duration of borrowing has increased to 35% and 27 years respectively. These measures will allow people whose file was too fair to claim the mortgage again.
Banks' debt ratio rises from 33% to 35%
Bruno Le Maire, Minister of the Economy, said that the High Council for Financial Stability, composed of the Ministry of the Economy and the Bank of France, has taken the decision to relax the rules that blocked the granting of real estate credit over the past year and more generally since the beginning of the health crisis.
The maximum debt ratio, which was previously set at a maximum of 33%, has increased to 35%. The same applies to the duration of indebtedness, which is increased to a maximum of 27 years, compared to 25 years initially.
François Villeroy de Galhau, the governor of the Banque de France, had previously announced that he was inclined to ease, after declaring that he was "ready to propose a limited and reasonable adjustment of certain criteria, provided that we keep clearly and firmly the course of stopping a continuous drift in the conditions of granting, which would expose households to the risk of over-indebtedness."
Increasingly rejected mortgage application files
A year ago, the limits to the mortgage agreement were set, with the aim of reducing the risk of household over-indebtedness. But these flexibilities will prove to be advantageous for the most modest households and first-time buyers who had been sidelined since the beginning of the health crisis because of borrowing conditions that had become too firm.
People whose access to real estate credit has been refused, will now be able to claim it again, by increasing both their debt ratio and the duration of their loan. Bruno Le Maire said that "some banks have not sufficiently respected the rules", which for the moment only followed recommendations. He added that he would "in the coming weeks, define the legal modalities to make these provisions binding."
Flexibilities that will benefit low-income households
A year ago, the limits to the mortgage loan agreement were set, with the aim of reducing the risks of over-indebtedness of households. But these flexibilities will prove to be advantageous for the most modest households and first-time buyers who had been excluded since the beginning of the health crisis because of borrowing conditions that have become too firm.
People whose access to real estate credit has been refused, will now be able to claim it once again, by increasing both their debt ratio and the duration of their loan. Bruno Le Maire said that "some banks have not sufficiently respected the rules", which for the moment only followed recommendations. He added that he would "in the coming weeks, define the legal modalities to make these provisions binding."
- It was announced by the Minister of Economy that the debt ratio and the borrowing period have increased to 35% and 27 years respectively.
- These measures will allow people whose record was too fair to claim mortgage again.
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Posted on 20/10/2021 by
Andy LECUYER
