Since the start of the health crisis, the number of payment incidents has skyrocketed. Government aid offered only a temporary reprieve to businesses. Experts expect bankruptcies and job losses to explode in the coming months. According to the Banque de France, 13 billion euros of invoices are overdue today.
The crisis weakens the situation of households and their ability to repay
Before the last quarter of 2020, the outstanding amount of individual loans exceeded 1,300 billion euros according to the Banque de France, and more than 80% of this amount finances real estate purchases.
Households, which saw their wages partially cut, their contracts broken overnight, a sudden cessation of activity for some self-employed / entrepreneurs, will want to take out loans to cover their monthly expenses.
The latest survey conducted by the Diffusis agency for Meelo, a fintech specializing in the fight against fraud, revealed at the start of 2021:
Difficulties in repaying real estate loans or paying rents: 30% of owners and 15% of tenants surveyed say that they are in difficulty to honor their mortgage or pay their rent at the start of the year. 20% of the owners questioned intend to request a deferral of repayment and / or repayment facilities. ? Since the start of the health crisis, 27% of those questioned have taken out a consumer loan to cope with financial difficulties, up to a limit of 1,000 euros in just under half of the cases: For 47% of For their part, consumer credit is used to make ends meet (bills, food etc.)
24% think of carrying out a consolidation of credits (consumer, real estate) to lower their monthly charge.
12% of people questioned have lost their jobs because of the crisis A risk of over-indebtedness, 8% say they think they have recourse to an over-indebtedness file with the Bank of France. The use of split payment by 80% of respondents (sum of yes rarely, sometimes and often). Vs 75%, at the last barometer (October 2020).
This barometer is in line with the report of the Abbé-Pierre Foundation, made public on Monday, February 2, and which warns of the increase in households’ difficulties in paying their rent. Public landlords were already recording an increase of 65 million euros in unpaid rents compared to February 2020, according to figures from the Social Union for Housing.
Behind this global approach, the financial situation of households evolves very differently
The risk of default is very low for customers whose income is generally stable: employees on permanent contracts, civil servants, retirees.
Fruit of the collapse in consumption, some French people have never saved as much as during the health crisis. In March 2020, at the start of the crisis, households increased their bank deposits by 20 billion euros, according to the Banque de France. A spectacular figure: over the last three years, the average monthly increase in deposits amounted to 6 billion. The savings rate of the French, already one of the highest in Europe, could this year reach unprecedented levels, “between 17% and 20%”.
The situation is, on the other hand, worrying for the French who have a precarious status (students, CDD, Interim, intermittent entertainment workers but also job seekers) and those who are suffering a significant drop in their activity due to the crisis and the measures restriction (autoentrepreneurs, artisans, traders etc.). The latter have more and more unpaid rents and energy bills.
On the other hand, because of their precarious situation, they are often excluded from credit.
The major risk is not the explosion of the credit default of current customers, provided of course that the actors have effective prevention and recovery solutions.
The risk is the customers who will need financing or solutions to survive, which particularly concerns the new fringe of precarious French. In this case, the temptation could be great to embellish his file (false declaration, fraudulent receipts) or to finance himself with the actors carrying out less checks or having no scoring.
In all sectors where we do not pay cash (Energy, Financials, Rental companies, Retailers), the challenge is clear: preventive solutions must be implemented while maximizing sales.