After a record number of loans granted in 2019, the High Council for Financial Stability (HCSF) decided to tighten the conditions to obtain loans for the year 2020, in particular with the aim of limiting the risk of over-indebtedness of the most vulnerable households and thus avoid unpaid bills.
Also, although the general conditions for granting a loan, i.e. a maximum indebtedness of 33% and a maximum borrowing period of 25 years, have not been changed strictly speaking, these rules have been applied to the letter during this year 2020, leaving no means of circumvention.
The consequence: many loans have been refused, especially to first-time buyers, while their debt ratio has exceeded 33% infinitely.
Faced with the large number of refused applications and in this context of health crisis, a relaxation of the conditions for obtaining loans has been voted for 2021. So what is the situation now?

• The debt ratio: initially limited to 33%, now this rate can be pushed up to 35%, which considerably increases the borrowing capacity of a household.

• The maximum loan term: this was a maximum of 25 years. Thanks to the new provisions, this maximum period can be extended up to 27 years in the context of new purchases, renovations and constructions, thus including the two years of deferral.

• The latitude left to the bankers: Yesterday, 15% of loan application files could be accepted despite a debt ratio of over 33%, either thanks to their remainder to be lived or else thanks to substantial savings in parallel. Today, 20% of cases can be accepted.

Despite these new arrangements, banks will remain extremely vigilant with regard to the remainder of borrowers' living, their account management and the amount of their savings. The easing of these conditions should not lead to over-indebtedness of French households.

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