Real Estate Loan Volumes Plunge

Crédit Agricole d’Ille-et-Vilaine has experienced a significant contraction in its real estate lending activities. New Habitat credits plummeted to €987 million in 2024, a stark contrast to the €1.5 billion recorded in 2023 and the €2 billion in 2022. This downturn reflects a broader trend of declining real estate transactions, exacerbated by rising interest rates and increased borrowing costs. The situation is further complex by elevated property prices and pervasive uncertainties surrounding purchasing power.

The high real estate prices have also played, as well as the uncertainties on purchasing power.
Jean-Yves Carillet

Confidence crisis among Buyers

According to Jean-Yves Carillet, Director General of Crédit Agricole 35, which holds a ample share (approximately one-third) of the banking market in the Ille-et-Vilaine department, a question of confidence is gripping potential homebuyers.Hesitant and apprehensive, many are opting to save rather than invest in property. This shift is evident in the increased deposits in savings accounts, with a nearly 6% rise in standard savings accounts and a remarkable 21% surge in term deposits during 2024. This risk-averse behavior underscores the current market sentiment.

Crédit Agricole’s Commitment Amidst Market Challenges

Despite the overall reduction in Habitat credits within the Bretillian economy—estimated at €1.5 billion in 2024 across all banking institutions—crédit Agricole 35 asserts that it has maintained its lending operations. Unlike some competitors, the bank chose not to fully pass on the increased costs to consumers, absorbing approximately €30 million over a critical six-to-nine-month period. This decision reflects a strategic commitment to supporting the local economy.

We said to ourselves that if we stop [de financer des crédits immobiliers]it was going to seize the machine and impact an entire economic sector.
Jean-Yves Carillet

Crédit Agricole 35 emphasizes its position as the leading banking network in the department, serving 534,000 customers through 118 branches. The bank highlights the stability of its other credit portfolios, including those for businesses, professionals, communities, and agriculture, which remained steady at €1.3 billion in 2024.This stability underscores the dynamic and resilient nature of the local economy, despite the challenges in the real estate sector.

Cautious Outlook for 2025 and Beyond

looking ahead to 2025, Crédit Agricole maintains a cautious outlook for the real estate market, anticipating that a return to normalcy is unlikely before 2026. While there have been slight improvements at the beginning of the year, the market has not yet regained its previous momentum. The anticipated decline in interest rates to around 3% by mid-year has been tempered by the proclamation of an €800 billion European rearmament plan, which has lead to a temporary increase in rates. The bank now projects rates to hover around 3.5%-4%, a less favorable scenario for potential borrowers.

The fluctuations in interest rates significantly impact buyer sentiment and affordability. For example, a recent study by the National Association of Realtors indicates that for every 1% increase in interest rates, purchasing power decreases by approximately 10%. This sensitivity highlights the importance of stable and predictable interest rate environments for fostering a healthy real estate market. [2]

Crédit Agricole offers resources like a simulateur de prêt immobilier to help potential buyers evaluate their options. [2]