After the announcement by the President of the Republic of unpleasant socio-economic prospects, the French will probably continue to reduce their spending by further limiting the use of borrowing and probably also by increasing the number of requests for repurchases of credits.
An announced reduction in family allowances
Last notch in date in the confidence of the French, and more particularly those of the so-called ” middle class”, the announcement of a probable reduction in family allowances for wealthy households, implying those whose average monthly income exceeds 2500 USD. Recall that a couple whose two spouses earn barely more than the minimum wage therefore now fall into the category of ” wealthy households “, even if they would have several dependent children.
The credit market at its worst
In fact, this declaration is likely to accentuate the feeling of economic insecurity of the French, and to encourage more households to delay or even give up their projects. As a direct consequence, the credit market is likely to continue to fall, in an already gloomy context which saw in particular the production of consumer credit fall by almost 5% last year, thus constituting one of the worst years since at least 20 years.
The appropriateness of buying back credits
It is therefore not surprising that the repurchase of loans will experience strong growth (some brokers have been talking about a number of files multiplied by 10 since the start of 2012). Admittedly, it is always possible to renegotiate its loans with its bank, and this operation could help a large number of French people to reduce the cost of their debt in the perspective of a significant reduction in their allowances.
However, most banks are likely to be reluctant to lower the terms of a loan taken out a few years ago and for which they raised funds at a certain cost at that time. This is why, the repurchase of credits is more interesting because it corresponds to a new credit, generally subscribed in another establishment on conditions much more advantageous for the two parties, and making it possible to repay the initial credits.