Real estate credit: Europe is worth it!


Our European neighbors are worse off than the French when it comes to real estate loans! Indeed, banks in the euro area harden the conditions for obtaining real estate loans , particularly in Germany, Spain and Italy. France and the Netherlands remain untouched by this tightening with eased conditions. At the same time, loan demand continues to rise sharply thanks to low real estate rates.

European banks tighten screw

European banks tighten screw

It is the European Centrum Bank (ECB) that sounds the alarm and explains, in its recent report (poll conducted between March 4 and 19 at 144 banks in the euro zone) that despite low mortgage rates and strong demand, European banks have tightened their terms.

In the first quarter of 2019, the criteria for granting a mortgage were tightened by 3% net . The explanation is related to the banks’ “refinancing cost” and their balance sheet constraints. It should be noted, however, that credit conditions for companies have not changed, contrary to previous forecasts.

Germany, Spain and Italy see their conditions harden

Germany, Spain and Italy see their conditions harden

Our neighbors German, Italian and Spanish have seen their conditions for obtaining mortgage loans become stricter in recent months. Yet demand for housing is up 14%, linked to low interest rates. But not all countries are in the same boat since France and the Netherlands have seen their standards soften. However, a new tightening is expected in the next quarter by the ECB despite a demand that continues to increase.

A loan application that continues to increase

A loan application that continues to increase

The demand for loans to finance the purchase of housing has increased by 14% this first quarter (+ 12% in the last quarter of 2018). This strong growth is explained in addition to rates by a good climate of trust of borrowers and a real estate market that is doing well. Demand that should continue to increase in the next few months according to the banks. The ECB concludes its report on a growth forecast of the euro area to 1.1% for the year 2019 against the backdrop of a Brexit that remains to be clarified.

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