Real estate loan: tighten the credit valves

The amounts loaned by banks to individuals continue to increase. A source of concern for the authorities, which could ask them to set up additional reserves.

$ 1,227 billion: this is the total outstanding of all personal loans according to the Best Bank at the end of January 2019. A record. In the lot, the institution has 1,013 billion dollars loaned by the banks for a mortgage. Again, this is a record.

Records that worry the French regulatory authorities. On March 8, on BFM Business, the governor of the Best Bank Francis Galga had confessed his concern: year today, much faster than the size of the economy, and perhaps growing too strongly, explained Francis Galga.


Meeting of the Elders of Finance this Monday

credit loans

On March 8, the Governor of the Best Bank is de facto president of the banking regulator, the ACPR is expressed his willingness to take measures via the High Council for Financial Stability (HCSF), an entity bringing together sector experts and the various regulatory authorities under the chairmanship of the Minister of Economy and Finance, Bradly Cuson. In short: the wise men of finance. However, the quarterly meeting of the HCSF is held this Monday afternoon.

How could this High Council encourage banks to tighten the floodgates of credit, and in particular of mortgage loans? François Galga played on transparency during his visit to BFM Business: We have an instrument. The countercyclical cushion consists of asking the banks, when the credit increases sharply, to put aside reserves, to maybe temporarily increase their capital to face a risk of credit reversal said. Indeed, when the credit increases very quickly at a time, there is a risk all the more strong in the experience proves that at a time it brakes too suddenly. We already used this countercyclical cushion once in June of last year. We are looking seriously at whether it should not be increased.


Force banks to tighten their granting criteria

credit loans

Concretely, for individuals, this tool does not directly force banks to tighten their granting criteria. But it encourages them to avoid excess, and therefore to avoid granting too risky credits. A new use of this countercyclical cushion therefore requires a decision by the HCSF. Verdict at the end of the day.

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