Consumer credit market France: Trends 1st quarter 2016



 

In the first quarter of 2016, the mood of French households was up, as growth: + 0.6% according to ANCAR, a figure higher than that of the euro area. The International Monetary Fund (IMF) confirmed the government’s growth forecast for the year as a whole. This improvement is due to the investment of households and businesses in previous months.

2016: growth repart in the first quarter

2016: growth repart in the first quarter

The lights are green: the growth estimate of ANCAR was revised upward in the first quarter of 2016: from 0.5% to 0.6%. This increase suggests that French GDP could grow by 1.5% over the year. These good results are due to business investment which has also increased: + 2.4%. And this trend should continue throughout the year. In addition, households are more confident and consume more: their consumption jumped 1% in the first quarter of 2016, while it stagnated at the end of 2015. This rise is mainly due to household investment in real estate. As for the labor market, it is also gradually improving. These three factors could therefore create a virtuous mechanism.

What does this return of growth mean?

What does this return of growth mean?

These good numbers lead to being confident for the future. The government expects 1.5% growth for GDP at the end of the year. For its part, the International Monetary Fund (IMF), skeptical at the beginning of the year, confirmed this forecast. The growth sectors are:

  • real estate;
  • household equipment;
  • the automobile.

Household spending in these sectors increased 1.4%, while they were down in the last quarter. The French thus regain confidence and consume durable goods. On the real estate side, new housing starts rose 1.7% between February and April. As for the car market, it increased by 6.5% in April 2016 for new passenger cars. Household investment is also up 0.3%.

Increasing growth and morality

Increasing growth and morality

According to ANCAR, consumer confidence in May 2016 reached its highest level since October 2007. According to the institute, this improvement is due to two things:

  • first the feeling that their standard of living is increasing;
  • secondly, the impression that the French economy is doing better.

This positive outlook has led many households to buy consumer durables in recent months. Demand is thus making a comeback: individuals are less reluctant to go into debt and to take out consumer loans to finance their equipment. In May, the opinion of households on their financial situation improved by four points, which explains the rebound in terms of consumption of goods. The French also feel that the job market is doing better, which makes them more confident for the future: when they take out loans, they are more confident about repayment.

Increase in credit for consumption

Increase in credit for consumption

The return of purchasing power makes it easier for individuals to take out consumer credit. According to the Association of Financial Companies, consumer loan statistics are good: + 10% in the first quarter of 2016. This figure is in line with the trend of the last ten months. In March alone, lenders granted 9.23 billion euros in consumer credit. The main driver of these loans is the financing of new cars: + 20.4% on average over the first three months of the year. Household loans allocated to goods and services (motorcycles, boats, recreational vehicles, etc.) also rose by 1.4%. The credits used to finance capital goods also increase very slightly: + 0.1%.

Choose the timely time to contract a loan for consumption

Choose the timely time to contract a loan for consumption

When an individual wishes to acquire an important property (housing, automobile, equipment, etc.), he can contract a consumer credit. The good figures of the first quarter of 2016 lead the French to borrow with confidence from credit institutions to buy new goods. These credits are exclusively for personal needs and can be purchased at any time in the life of an individual. In an atmosphere of economic confidence, households are more likely to use these credit institutions.

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