France’s Historic Credit Drop: Crisis or Temporary Slowdown?

The French are borrowing less and less, an unprecedented trend that raises numerous questions about the country’s economic dynamics. For the past six years, the contraction of the credit market reflects both the caution of households and the structural difficulties in real estate and consumption. The credit ownership rate has fallen to its lowest level in over thirty years, a situation that even surpasses the shockwave caused by the subprime crisis in 2008. However, the first signs of a rebound in 2025 are emerging, fueled by a gradual improvement in the financial situation of households.

A historic collapse of credit in France

The credit market is experiencing an unprecedented decline, with more than a million fewer loans since 2019, according to the Observatory of Household Credits (OCM). This figure illustrates a contraction that is even more marked than after the financial crisis of 2008, when the decline was limited to 660,000 loans. The credit ownership rate has fallen to 41.9 % in 2024, compared to 42.7 % the previous year and 47.4 % in 2019, thus reaching its lowest level in over three decades. Indeed, “the French are delaying their purchasing decisions and postponing their investment projects,” analyze Maya Atig, General Director of the French Banking Federation (FBF), and Solenne Lepage, General Delegate of the French Association of Financial Companies (ASF).

The decline in consumer credit is even more pronounced. Only 19 % of households have consumer credit in 2024, compared to 20.9 % in 2023 and 26.5 % in 2019, a historically low level since 1989. This decline is explained by the slowdown in the real estate market, reducing financing needs, as well as a decrease in purchases of household appliances, vehicles, and renovation work. Economic uncertainty is thus prompting households to defer their spending and wait for a more favorable climate.

Towards a gradual recovery in 2025 ?

Despite this contraction in credit, some indicators suggest a possible improvement. Inflation slowed to 2 % in 2024, offering a slight respite to households’ purchasing power. Furthermore, 85.4 % of borrowers currently perceive their repayment burdens as manageable, indicating a gradual return to financial stability. However, this increased caution is also fueled by uncertainties related to the job market and the post-Covid economic consequences.

The outlook for the year 2025 displays a slight rebound in subscription intentions. According to the OCM, consumer credit is expected to grow to 3.7 % in the first half of 2025 (compared to 3.5 % in 2023), while real estate credit is expected to rise to 3.1 % (compared to 2.8 % in 2023). Although this rebound remains moderate compared to historical averages, it reflects a gradual return of confidence. However, this recovery could be hindered by external factors, notably political developments and the stability of the labor market.

If the collapse of credit in France reflects an unprecedented caution from households, the first signals of a turnaround are beginning to appear. The improvement in the financial climate could favor a gradual recovery during this year 2025, although it remains conditioned on the evolution of the economic and political context. For credit stakeholders and the real estate market in France, the coming months will be decisive in confirming or refuting this trend.