The French have never been so indebted

For the first time in 25 years, only 47.2% of households held a loan in 2013 according to the latest report from the Observatory for Household Credit. With the crisis, the French have mainly reduced their consumption expenditure.

The number of indebted French people reached a historically low-level last year, according to the latest report of the Observatory of credits to households *. In 2013, only 47.6% had a loan (27.5 million households), 1% less than in 2012, which was already a year in sharp decline. After five consecutive years of decline (52.8% held a loan in 2008), the share of indebted households falls to a new level since 1989, when the observatory was created.

With the crisis, households have mainly reduced their consumption expenditure. Only 26.6% of them had consumer credit (27.6% in 2012). This is also the lowest rate in 25 years! “Households have abandoned all or part of their projects,” says economics professor Michel Mouillart, author of the study. They have thus subscribed to fewer car loans (-3.6% since 2009, ie between 900,000 and 950,000 car loans less). Now very cautious, the majority of households (93.6%) go into debt to finance often-needed capital expenditure (improvements to housing, cars, household appliances).

The Lagarde law, which since 2010 regulates consumer credit and in particular revolving credit, also continues to produce effects. Only 5.4% of households had store cards compared to 9.6% in 2008. The number of loans granted at the point of sale also declined (5.9% in 2013, compared to 7.2% in 2008).

2014 announces for the moment under better auspices

Given the slowdown in the housing market, only 31% of households repaid loans last year (31.4% in 2012). “The decline in credit rates and longer borrowing times have probably avoided the market deteriorating further,” said Michel Mouillart. Taking advantage of historically favorable credit conditions, the French have often borrowed larger amounts to become owners.

However, 2014 looks set for the moment under better auspices. A little more confident in the future, households are planning to make more use of credit this year. In detail, 4.5% plan to take out a mortgage in the next six months (+ 0.4% compared to the end of 2012) and 3.9% to subscribe a consumer credit (+ 0.4% ). But this timid improvement will not help to restore the levels of six or seven years ago. Especially since the crisis is still pregnant. And “households seem to have changed their practice of using consumer credit, forced it is true by the new regulations,” notes the study.