Mortgage loan refusals continue to increase into Spring 2023.

Percentages of buyers having loans refused

Among the reasons leading to a loan refusal, the buyers concerned mainly cite a problem with mortgage interest rate caps imposed by the government: 62.1%. The other reasons come far behind: a high debt ratio (30.5%), a professional situation (21.7%) and insufficient personal contribution (20.2%).

Finally, we also note that the Energy Performance Diagnosis (DPE.), to which banks are paying more and more attention, was an obstacle in 3.3% of cases.

9.8% of buyers have recently been refused a loan. And 62% of them blame interest rate caps meant to protect the consumer! © PAP

Everyone requesting a loan is being affected

Loan refusals affect all types of professional profiles, including those who might seem to escape it, like private sector employees on permanent contracts who represent just over one in two cases. As well as all age groups, with a peak of 32% among 40-49 year olds. And not just first-time buyers as one might think, since they only represent 37.1% of cases.

Private employees on permanent contracts are not spared: they represent 51% of loan refusals. © PAP

The acquisition of a main residence represents 83% of loan applications. © PAP

Loan rejections led just over one in two buyers (52.2%) to change their search criteria. When the balance (47.8%) is hoping for a drop in prices.

Following a loan refusal, more than 1 out of 2 buyers modified their search criteria. © PAP

60.4% of all credit buyers say they are worried

The question of financing concerns all buyers, even those who have not been confronted with a loan refusal since 60.4% of buyers indicate that they are worried about this subject. At the same time, 92% of buyers expect interest rates to rise in the coming months.

33% of buyers fear that their credit will be refused because of the interest rate caps which mean mortgages can not be granted above a certain interest rate. These government set rates are not reviewed often enough to keep up with changing market conditions. © PAP

One in three buyers are not attempting a loan

33.4% of respondents are considering a cash purchase, without having to use credit. This was made possible by the resale of their initial property before embarking on a purchase, even if it means going through rental for the time to find the rare pearl. A strategy implemented in particular by retirees (58.1% of cash buyers are retirees) who have been able to save and who know they are excluded from credit. But this solution (selling before buying back) could also help assets which would thus have a more favorable profile with more personal contribution.

Nearly one buyer in three buys cash without resorting to a bank loan. © PAP

41.4% of buyers expect prices to fall in the coming months

Asked about how they anticipate the market, the majority of buyers think that property prices will fall (41.4%), when 35.3% are betting on stability. Finally, 23.4% believe that prices will continue to rise.

41% of buyers anticipate a drop in property prices… © PAP

Source:  PAP.fr