Falling credit demand leads to first slight decrease in credit provision

This represents a decrease of almost 11% in the number of credit agreements granted compared to the third quarter of the previous year. Also, in terms of amount, slightly more than 4.5% less credit was granted than back then.

Excluding refinancings, the number of credit applications in the third quarter of 2022 decreased by more than 13% compared to the third quarter of 2021. In terms of amount, there was also a decrease of almost 10%.

After a very strong 2021 and an equally strong first half of 2022, during which record levels of credit provision were consistently recorded, the third quarter of 2022 marks the first decrease in mortgage lending compared to the third quarter of 2021. Nevertheless, credit provision is still at a very high level, and only in the third quarter of last year was more mortgage credit granted (in amount) than in the third quarter of this year.

Interest rates for mortgage loans saw an expected upward trend in the past quarter. According to figures published by the National Bank of Belgium, in August, they averaged 2.27% (for loans with an initial fixed interest period of 1 year or more than 5 and up to 10 years) and averaged 2.82% (for loans with an initial fixed interest period of more than 1 year and up to 5 years).

The number of credit applications, excluding those related to external refinancing, decreased by almost 13.5% during the third quarter of 2022 compared to the same quarter of the previous year. The underlying amount of credit applications also decreased by almost 10%.

The number of credit applications decreased for all purposes. Credit applications for home purchases (-2,982) decreased by 6%, those for home purchase + renovation (-990) by 18.5%. The number of credit applications for home renovation (-3,462, or -22.4%), as well as credit applications for other purposes (garage, building land...) saw a significant decrease (-1,872, or -34.6%), along with the number of credit applications for home construction (-2,246, or -20%). The number of external refinancing applications also saw a spectacular decrease of -64%, which is not surprising in the current rising interest rate climate.

In the third quarter of 2022, the number of loans granted, excluding external refinancings, decreased by almost 11% compared to the third quarter of 2021. The corresponding amount also decreased by just over 4.5%.

Despite this decrease, credit provision remains steady.

In the third quarter of 2022, just over 61,000 new loans were granted for a total amount of just over 10.5 billion EUR, excluding external refinancings.

Overall, there was a decrease in the number of loans granted by almost 11% compared to the third quarter of 2021, and this decrease was noticeable for all purposes.

The number of loans for home purchases (-1,532, or -4.2%) saw a relatively modest decrease compared to the third quarter of 2021. The number of loans for home purchase with renovation (-82) decreased by -2.7%, while the number of construction loans (-723) experienced a decrease of -7.4%. On the other hand, the number of loans for other purposes (-1,320) saw a stronger decrease of -30.2%, as did the number of loans for home renovation, which decreased by -24.6% or 3,664 loans less than in the third quarter of 2021.

In addition, in the third quarter of 2022, the number of external refinancings decreased by 53.8%. Nevertheless, almost 4,700 external refinancings were still granted, totaling about 630 million EUR.

The average loan amount for home construction saw a slight decrease and settled at 215,000 EUR in the third quarter of 2022. Nevertheless, this still represents an increase of about 46,000 EUR (or 27.3%) since the beginning of 2019.

The average loan amount for home purchase remained stable at around 197,000 EUR in the third quarter of 2022. However, this is still an increase of about 38,000 EUR (or 23.7%) in just under four years.

The average loan amount for home purchase + renovation decreased slightly to around 203,000 EUR in the third quarter.

In the third quarter of 2022, approximately 9 out of 10 borrowers (89.5%) once again opted for a fixed interest rate or a variable interest rate with an initial fixed interest period of at least 10 years. About 6% of borrowers opted for a variable interest rate with an initial fixed interest period between 3 and 10 years. Just over 4% of borrowers chose an annually variable interest rate.

Considering the rising interest rates (see chart below), Belgian consumers continue to overwhelmingly choose certainty. The number of people opting for a variable interest rate remains low. However, even in the case of a variable interest rate, consumers are strongly protected by legislation. After adjustment to the evolution of applicable reference indices, the variable interest rate can never exceed double the initial interest rate. 

The credit sector is and remains aware that mortgage lending must be done with great care, and responsible lending must remain the absolute guiding principle. On this point, the sector is in line with the regulator: lenders must exercise the necessary caution to avoid that individual borrowers take on excessively large loans on the one hand and to preserve financial stability in the long term on the other hand.

The complete statistics on mortgage credit (2000 - 2022Q3), broken down by loan purpose and interest rate type, are available on the BVK website under the "Press & Figures" section.