More than 50% of the population is in debt

The rate of credit holdings by households has reached one of the highest levels since 1989, according to the French Banking Federation.

Nearly 14 million households, 52% of the population, subscribed a loan in 2007. A share sharply increased since in a year, 450 000 additional households have subscribed credits. The “debt diffusion rate is recovering in 2007”, with 10 million credits granted to households, says the French Banking Federation (FFB). In parallel, the use of overdraft is practiced by 24.1% of households.

The under the 30s remain the most indebted. They were 20.3% to have resorted to a mortgage in 2007, against 13.2% in 2001. Conversely, “the use of consumer credit fell again: 36.8%,” says the FFB. Among the over 65s, 21.1% repay a consumer credit. A share that amounts to 36.8% among those under 30, to finance the purchase, for 2 young people out of 3, a car or a motorcycle.

In 2007, “7.22 million households used one or more new loans”, including 2.3 million in real estate loans and 8 million in consumer loans.

More and more fragile households

Indebted households say they are most confident about their budget. They are 16% to consider themselves “at ease”, 36.5% consider their budget “sufficient” and 32.5% say “just enough”. On the contrary, 15% of them perceive this situation as “difficult”. The share of fragile households is still growing, from 6.8% in 2006 to 8.2% in 2007. “There are also more and more of them (11.2%) to consider, in the future, a large use of credit”, continues Michel Mouillart, professor of economics and author of this study.

In one year, the burden of reimbursement charges is also increasingly heavy in the eyes of the French, due to stagnant revenues and rising interest rates. Nearly 49% of them consider these charges “sustainable”, compared to 52.9% in 2006. And the number of households judging them “much too high” went from 4.5% to 6.2% in one year. A situation that seems “to have deteriorated significantly for a significant share of those who use only consumer credit,” says the FFB. Paradoxically, 5.8% of households are considering using a home loan in the next six months (4.9% in 2006) and 5.1% of them to a consumer credit (4.5% a year earlier).