the real estate loan market is restarting

The Crédit Logement/CSA Observatory notes “a nice recovery in credit production” with significant rate cuts, especially for first-time buyers.

For several months we have seen the outlines of an improvement taking shape. Today, the Crédit Logement/CSA Observatory is clear: there is a real recovery in the real estate loan market.

“It has established itself well and it has every chance of being lasting,” explains the organization in its quarterly press conference this Thursday, October 17.

Besides, you shouldn’t trust appearances. The dynamism of the real estate loan market weakened slightly in the 3rd quarter. “But this is not due to a fragile economic situation or a lesser appetite among households for mortgage loans,” analyzes Michel Mouillard, economist and co-head of the Observatory.

In reality, according to him, the market is returning to its usual seasonality. The results for the 3rd quarter therefore suffered from the drop in activity in August, as observed every year. Thus, activity in the 3rd quarter fell by 13.9% compared to that of the previous quarter.

Rates are falling, especially for first-time buyers

But this does not call into question the overall recovery dynamic with +11.4% in real estate loan production in Q3 2024 on a rolling annual level. A restart which is obviously linked to the fall in property loan rates. They go from 4.20% on average in December 2023 to 3.54% in September 2024.

The drop is more significant over long loan durations with a decline of 76 basis points over 20 years or 25 years, compared to 65 for those over 15 years.

“The banks have supported more modest households and first-time buyers more strongly, they are often young and constitute a future clientele for the banks,” explains Michel Mouillard.

In a context of credit costs which remain high despite the fall in rates, the duration of loans has increased and reached 248 months. However, one effect has undermined the combined benefits of the drop in rates and the extension of loan duration.

Price rise

Indeed, the average cost of financed operations is raised by the rise in property prices in existing properties, which “clearly attenuates the effectiveness of the rate and duration effects”. Thus, in September 2024, the annuity supported for a loan of 100,000 euros is only 6.6% lower than its level of December 2023. It remains higher by 12.3% compared to December 2022 and 24 .2% compared to December 2021, before credit conditions deteriorated.

Despite the rise in prices of old housing, the purchasing power of households is improving. The purchasable surface area has increased in nearly 80% of cities thanks to improved credit conditions. Over the past year, the purchasable surface area has increased by 2.4 square meters on average in France.

Finally, the last element, purchasing intentions are rising again after reaching a low point at the start of summer 2023. They have now returned to their level at the start of summer 2022, before the rise in ECB rates.

The Crédit Logement/CSA Observatory therefore wants to be optimistic for the future. “In the absence of an external shock to the market, the restart of production observed since the beginning of 2024 should continue until the end of 2024,” he concludes.