The High Council for Financial Stability

Measure relating to the granting of mortgages

In accordance with the power conferred by paragraph 5 of Article L.631-2-1 of the Monetary and Financial Code, on 29 September 2021 the HCSF issued a decision on the conditions for granting home loans (decision D-HCSF-2021-7), applicable from 1 January 2022.

Restricting lending conditions

In October 2019, the HCSF published a diagnosis of risks in the residential property sector. This highlighted a gradual easing of lending conditions (longer maturities, higher loan-to-value ratios and lower deposit rates) combined with an increase in household debt and the associated repayment burden. This observation echoes that made by the European Systemic Risk Board (ESRB) in its June 2019 alert.

In December 2019, the High Council issued an initial recommendation on the conditions for granting residential mortgages. At the end of 2020, the ACPR's monitoring of lending conditions enabled it to draw up an initial assessment of the implementation of this recommendation and to adjust the criteria: a second recommendation was therefore adopted in January 2021.

A second assessment at the end of summer 2021 confirmed the positive impact of the measure, with a halt to the drift in lending conditions, continued broad access to home loans for households and a robust housing market. The Haut Conseil has therefore decided to make the criteria in the recommendation binding, to ensure that these good lending practices continue.

The measure in force

The HCSF's decision of 29 September 2021 on the conditions for granting home loans establishes two criteria that credit institutions must apply to home loans:

  • borrowers' effort ratio, i.e. the ratio of their borrowing costs to their income, must not exceed 35% ;
  • the term of the loan must not exceed 25 years (with a tolerance of a 2-year grace period in cases where enjoyment of the property is delayed relative to the granting of the loan).

According to the decision of 29 June 2023, institutions may derogate from these criteria for a margin of flexibility of up to 20% of new home loans granted each calendar quarter. Within this margin, at least 70% (instead of 80% previously) of the maximum flexibility must be reserved for buyers of their principal residence and at least 30% for first-time buyers. The remaining 30% of the maximum flexibility (i.e. 6% of quarterly production, instead of 4% previously) may be used freely.

Download

Monitoring the use of the flexibility margin - Q2 2025

Details on the use of the margin.pdf

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