Rejected loan applications will get a second chance
On February 1, the French Banking Federation officially announced the upcoming implementation of a mechanism to reconsider mortgage applications that had initially been denied, a measure that was welcomed despite being described as potentially complex to implement.
Sometime in February, banks will implement a temporary measure to reconsider applications from customers whose mortgage applications were initially rejected. This initiative, requested by the High Council for Financial Stability (HCSF) on December 4, was confirmed by the French Banking Federation on February 1.
Valid through the end of 2024, this measure applies to all customers who have already submitted an application that meets their bank’s requirements, with the exception of those listed in the payment delinquency records maintained by the Banque de France (listings resulting from an overdraft, a bounced check, bankruptcy, etc.) and consulted by banks before granting a loan.
It is important to note that the bank retains its decision-making authority in this process. All types of financing (primary residence, second home, rental investment) are included, but the review will be triggered only if the application meets the HCSF’s approval criteria. Another condition stipulates that the purchase process must still be underway, that is, within the 45- to 60-day timeframe specified in the conditions precedent. Sandrine Allonier, spokesperson for the mortgage broker Vousfinancer, expresses reservations, pointing out that this condition seems difficult to apply in practice, given that the initial rejection often occurs just a few days before the deadline.
The banks themselves will review the applications, with each institution free to determine its own organizational procedures. Unlike other programs such as Aeras, there are no plans to create an external entity tasked with reviewing applications independently of the banks.
Although this initiative is good news for individuals looking to move forward with their real estate plans, it comes too late in the context of a credit recovery. Credit issuance fell by more than 42% between 2022 and 2023, according to the Observatoire Crédit Logement, and transactions declined by 18%, according to notaries. However, it comes at a time when bank fees are beginning to drop, anticipating a possible decrease in interest rates by the end of 2024.
