(Bloomberg) -- The French government plans a series of measures to help would-be homebuyers access credit as higher interest rates squeeze the real estate market.
These include extending the maximum loan maturity to 27 years from 25 where renovation accounts for more than 10% of the transaction, as well as relaxing restrictions on bridging loans, according to officials at France’s high council for financial stability (HCSF).
Banks will be allowed more flexibility in deciding whether to issue mortgages that don’t respect all lending conditions, they added. While the proportion of those loans will still be capped at 20% of the total, the calculation will be based on a rolling period of nine months rather than the three-month limit currently in force.
New home loans in France have fallen below €10 billion ($10.8 billion) a month for the first time since 2015, in part as households faced with higher borrowing costs become more cautious. Finance Minister Bruno Le Maire has said there may be supply issues and that the HCSF would look at ways to loosen lending conditions.
Bank of France Governor Francois Villeroy de Galhau said last month that banks could boost lending as they are not using all the leeway they have on the country’s mortgage rules. Still, he said regulators should look at ways to track loan refusals by banks.
While there has been a strong slowdown in credit distribution, the total volume continues to rise, the HCSF officials said, speaking on condition of anonymity following a meeting of the council.
They added that a procedure will be introduced for would-be borrowers to contest loan refusals.
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