By dint of reminding them that they must ensure that they can repay their credit before borrowing, or requesting a repurchase of credits, it seems that the French have finally learned the lesson. A little too well perhaps because, in these uncertain times of financial crisis, consumers have obviously chosen to be content with the bare essentials for the coming months, at the same time greatly limiting the use of credit.
More and more French people are giving up credit and postponing their purchases
Already in 2011, almost 500,000 households had given up on some of their projects which required applying for credit. At an average of 12,000 USD per credit in France, several billion USD have not been injected into the economic machine, and the trend seems to be confirmed for 2012.
Indeed, without even waiting for the next interest rate hike planned for the spring, many French people have already given up on taking out a mortgage this year, postponing their plans until later. Likewise, and despite a slight upturn in late 2011, credit professionals expect a fairly significant drop in consumer loans, especially auto loans, in the coming months. The rise in fuels has had an impact on purchasing decisions, and the need for savings will have wiped out consumer enthusiasm.
Significant decline in consumption and credit, except for the highest earners
Moreover, it is on all consumption that the concern of the French will be felt in 2012, and INSEE does not expect a visible rebound before the end of the first half. We are just hoping for an upward tremor of 0.1 to 0.2% by June, but in general, the French will rather favor savings. In the end, the entire economy could well suffer from a decline in the number of credits, with greater repercussions on people with the lowest incomes.
On this last point, there is an interesting phenomenon concerning borrowers. Contrary to what one might think, it is not the less fortunate who take out consumer loans: the average income for a depreciable loan today amounts to $ 4,600, confirming that only the least worried French for their short term financial security is still planning to carry out projects for which they will need to apply for credit.