Fewer credits? The borrowers’ fault

According to various press releases and articles published last week, the significant decline in the number of personal loans granted by banks over the past year is mainly due to the reluctance of borrowers.

Banks deplore the image we have of credit

Banks deplore the image we have of credit

The banks are saying it: they are willing to continue lending, but applicants for credit are becoming increasingly rare. The enthusiasm for the repurchase of credits, already little appreciated for its propensity to trim the margins of the lending organizations, would be moreover responsible for a counter-publicity with regard to traditional bank loans ” presented almost always as too expensive and too binding ”. The direct consequence would be an ” unjustified loss of confidence in financial institutions ” and a growing reluctance which leads potential borrowers to postpone, or even cancel, their projects requiring external financing.

Note, however, that a loan buy-back is nothing other than a new renegotiated loan to include the various loans (and even certain debts) contracted by consumers.

A more nuanced personal credit reality

A more nuanced personal credit reality

However, despite all the goodwill of those responsible for communication in the banking sector, the reality is much less clear cut. In fact, the drop in credit requests is mainly linked to the economic crisis that we are currently going through and which now affects all aspects of the lives of French people. They are therefore naturally encouraged to be more careful.

But this reluctance is also widely shared by other economic players, starting with the banks themselves which, if they have never been known to be particularly open to requests for financing, have for the last year or two considerably tightened their eligibility criteria for credit applications, particularly from individuals. We can therefore easily understand that the latter end up giving up asking for credits which will be more and more often refused to them.

The repurchase of credits favors the financing market

The repurchase of credits favors the financing market

In the meantime, whatever the bankers say, credit buy-backs are positive for the credit market. By reducing the monthly payments of applicants, this device allows a short-term improvement of their situation, which is likely to encourage the desire for new individual projects (real estate, cars, equipment, travel).

Consequently, at the first announcement of a milder economic outlook, consumers will quickly return to the banks and other credit organizations.