With a Increase in real estate interest ratesWith the average reaching 3.59% in 2023 (down from just 4% currently), and the stagnation of real estate prices, access to property has become a major challenge for many French families.
Some families have managed to overcome these financial barriers by increasing their personal contributions and income, or by becoming first-time buyers in certain regions.
Today, we are being told that the required individual contribution, which exploded in 2023, has dropped significantly.
Personal contribution required by banks on reduction
According to the latest figures, personal contributions requested by banks are declining overall.
Finance Conseil, in partnership with BFM Business, shows an interesting trend: the average personal contribution for real estate loans in France has decreased significantly, falling by 18.5% between December 2023 and February 2024.
This reduction translates into a drop in the national average contribution from 64,942 euros to 54,798 euros per credit, equivalent to a difference of around 10,000 euros.
Regional differences
This development comes in the context of normalization after a period of extraordinary growth during the past three years.
The most spectacular drop in individual contributions is seen in the south of New Aquitaine, particularly around Bordeaux, where the average contribution has fallen from 73,927 euros to 40,587 euros, representing a 45% drop in just two months.
This downward trend is explained by banks’ desire to stimulate credit output, while ensuring that borrowers maintain savings reserves for unexpected events such as inflation or unexpected costs, following a significant decline in the previous year.
May the personal contribution be greater
Despite this reduction, the average individual contribution remains above 30%, at exactly 33%, while the traditionally required contribution varies between 10 and 15%.
Find out how to raise enough money for your personal contribution.
According to the Finance Council’s management, a gradual reduction to 25% is expected by the end of the year, although interest rates, currently around 4%, encourage borrowers to increase their contribution to reduce the total cost of their loans.
Buying real estate: A more favorable situation for some
Even if this general trend is encouraging, it must be emphasized that requested contributions vary by region..
For example, in Provence-Alpes-Côte d’Azur, it is significantly higher than elsewhere. The evaluation criteria for real estate credit files take into account factors such as the geographical location of the property, the financial strength of the household, the duration of the loan and of course the amount of personal contribution.
Why is personal contribution necessary?
Personal contribution is almost a mandatory step to get a real estate loan, especially in the current context.
No specific amount of personal contribution is legally imposedBut generally, it must cover at least 10% of the total cost of the real estate project.
A personal contribution is a crucial element in obtaining a real estate loan and carrying out your purchase project in the best possible conditions.
Despite the sometimes difficult real estate market, it is important to show persistence and tips to maximize your personal contribution, considering your personal and regional situation. Avail the best banking support during your real estate investment.
