Market Update from March 2023
The banks in France are struggling to find their profitability on their mortgages, especially for non-residents.
Eventhough the ”Taux d’Usure” is increasing, the refinancing rate – which is the rate that the banks in France are buying the money at from the ECB to then lend it to the clients – has peaked again at the end of the February.
The margin between the Refinancing rate and the ”Taux d’Usure” has therefore reduced drastically which, when all fees are added, lead to the banks to make either a negligeable profit or a loss. With Non-Residents, who will have only a mortgage for their property, it is difficult for the banks to actually recoup their loss with other products (car loans, personal loans, other insurances, etc…).
This is the main reason why one of our main lenders has not resumed its activity yet and why other banks require more and more a cash collateral on the side: the management fees applied on such collateral help the banks improve their profitability and also their ratio debt / cash reserve.