What is the reality of the mortgage market in Europe? The latest study published by Finance Crediter Bank answers this question. The conclusions are clear: the activity is dynamic, despite strong disparities between countries.
Most of the credits subscribed in Europe concern real estate
More than 6 billion euros! This is the amount of outstanding European mortgage loans in 2016. It sounds both huge and abstract, but it is a good result since it represents an annual increase of 3.1%. Over the 2011-2016 period, outstandings accelerated to + 9%. By outstanding amounts, Finance Crediter understands the amounts due including capital and interest.
Another significant result of the good performance of real estate credit in the Old Continent: the amount above is the vast majority of loans signed by households ( 88%). Per household owner, this represents an average of € 40,700.
All European households are not indebted in the same way
” Even if the use of credit remains very uneven from one country to another “, Finance Crediter was able to identify four major groups:
- Northern Europe (Denmark, Finland, Ireland, United Kingdom and Sweden, 18% of the population) has the highest household debt ratio (34% of mortgages in Europe, € 80,164 per household owner ). The reasons ? “The dynamism” of the markets, combined with the use of credit in fine, an attractive taxation and traditional links with credit;
- Central West Europe (Germany, Austria, Belgium, France, Luxembourg and the Netherlands, 37% of the population), accounts for 45% of outstanding loans from the European Union. The average outstanding per capita amounts to 45%;
- Southern Europe, made up of Cyprus, Spain, Greece, Italy, Malta and Portugal, representing 25% of the population. Households are less indebted: 18% of outstanding mortgage loans, for an outstanding amount per household of € 27,111;
- Eastern Europe (Bulgaria, Croatia, Estonia, Hungary, Latvia, Lithuania, Poland, Czech Republic, Romania, Slovakia and Slovenia, 20% of the population). Households are even less indebted: 10% have a loan, outstanding accounts for 3% of home loans and amounts to € 6,033 per household.
And France in all this?
The French borrowers are in 9th place, a ” middle” position close to Germany:
- outstanding mortgage loans account for 64% of gross household disposable income, just below the European average (67%), and even well below some countries (128% in the Netherlands and 194% in Denmark).
- the amount of outstandings represents 12% of households’ non-financial wealth, compared with a European average of 15%;
- the share of homeowners with a current home loan amounts to 31% of the population.
Falling property rates across Europe
” While the decline in interest rates has been very significant across the European Union, not all European households have benefited in the same way. ” To establish this observation, Finance Crediter evaluated the joint effect of changes in bank rates and real estate prices during the 2008-2016 period.
As a result, borrowers in countries with declining real estate prices saw their purchasing power rise dramatically, notably in Spain (+ 84%) and Italy (+ 53%). A previous Finance Crediter survey published last December already noted this gain in purchasing power among our Iberian and transalpine neighbors.
Conversely, the rise in some European countries (United Kingdom, Germany) is such that it covers the gain in real estate purchasing power generated by the fall in credit rates.
France, it is in the first category. In terms of purchase area, households gained 30% in 2016 compared to 2008.
And you, you plan to buy but have not yet launched your project? To have the best credit proposals, we advise you to compare real estate loans.