The French financial sector, strengthened by the rise in rates, must “ensure healthy financing of the French economy” and particularly continue to grant real estate loans, said Friday the governor of the Bank of France, François Villeroy of Galhau. “The refusal rate of banks, for equal risk, should not increase. Let’s be clear, this rate is not precisely measured, and this undoubtedly justifies a lot of interpretation and suspicion. There is a widespread feeling that it has risen,” noted the governor when opening the annual conference of the Prudential Control and Resolution Authority (ACPR).
The governor sees “no justification for this”, because the profitability and liquidity of the banks should not be a brake according to him. “It appears necessary and in the collective interest to better monitor these refusal rates”, while the granting of real estate loans fell to a “low point” of 9.2 billion euros in September, at levels of before the implementation of an “ultra-accommodative” monetary policy in 2015.
François Villeroy de Galhau invites banks and public authorities to “consider” opening an amicable procedure for “apparently solvent real estate loans which would have given rise to refusal”, as exists for business credit. The governor of the Bank of France defended the standards of the High Financial Stability Council (HCSF) – criticized by bankers – which limit the duration of loans and their weight in relation to household income, recalling that they have “filled ( their) mission” to stem overindebtedness and that there was room for flexibility.
More generally, François Villeroy de Galhau praised the “great resilience” of the French financial sector, despite “an exceptional level of uncertainty”. Even if the importance of fixed rates in real estate loans in France slows down the process for French banks, the increase in interest rates and the stabilization of the Livret A rate have strengthened the profitability and solvency of French banks. Insurers also benefited from the rise in rates, he noted.