The mortgage brokerage market - France (2024)

1.2 The global mortgage market

There is no global market size for mortgage brokerage. However, it is possible to look at projections for the size of the home loan market, allowing us to better appreciate the growth potential of brokerage in this field.

The global home loan market, estimated at $*,***.** billion in ****, is expected to grow at a rate of **.*%, reaching $**,***.** billion in ****, then at a rate of **.*% to reach $**,***.* billion in ****.

Global mortgage market size World, **** - **** - ****, in billions of dollars Source: ****

North America will dominate the mortgage market in ****. This dominance is set to continue in the coming years. However, growth is expected to be strongest in the Asia-Pacific region, particularly in China, India and Japan. [***]

The drivers of growth in the coming years are the digitization of processes, notably with the help of artificial intelligence, as well as a higher penetration rate of home loan consumption worldwide, particularly in Asia.

However, the covid-** pandemic has had a negative impact on this market, as consumer spending has been curbed and interest rates for home lenders have risen. In addition, tighter banking and financial regulations could slow market growth.

This dynamic environment is therefore conducive to growth in the global mortgage brokerage market

1.3 The French mortgage brokerage market

The proportion of brokers

Market share of real estate brokers France, **** - ****, in percent Source: ****

The French are increasingly turning to mortgage brokers when they want to borrow. In ****, they were **% of loan applicants; by ****, this figure had risen to **%, an increase of ** points in * years. We'll look at the details in *.*, but the majority of French people turn to real estate brokers for expert advice.

Sales

The total sales volume of French real estate brokers in **** is estimated at ***.** million euros.

To establish this figure, we used the following formula:

Business volume = Total amount of real estate loansx Loan rate passed on by a broker+ Bank commissions+ Amount of borrower fees

Total amount of home loans

Thanks to the Banque de France, we have in *.* a graph of the average monthly amount of new home loans for individuals, which gives us the annual average by multiplying this data by **. it should be noted that this figure does not take into account professional mortgages, which account for a much smaller proportion of mortgage brokers' sales.

Loan rates via a real estate broker

This figure corresponds to the first graph studied, so we find **% for ****, **%, **%, **% and **% for ****, ****, **** and ****. We apply this percentage ...

2.1 The French and mortgage brokers

The French and mortgage brokers

Percentage of French people who have used a broker for their home loan France, **** - ****, in percent Source: ****

The French are using IOBSPs more and more, with the proportion of French people using them increasing by ** points between **** and ****, from **% to **% of home loan applicants in ****.

French people who use brokers the most

Major categories of French people using an IOBSP France, **** - ****, in percent Source: ****

Among**-** year-olds, the proportion rose to **% in **** (***).

CSP+ (***) are also fond of real estate brokers, with **% using their services in ****, compared to **% in ****. By ****, only **% will be using these services.

Women, who used brokers more than men until ****, are now less likely to use them. Indeed, whereas in **** **% of women versus **% of men used brokers, in **** **% of women and **% of men did. [***].

In ****, **% of people in the Paris region used IOBSPs, ** points less than in ****.[***]

The reasons

Borrowers use real estate brokers for a variety of reasons:

Reasons for using a real estate broker France, ****, in percent Source: ****

In ****, the main reason was to save time (***).

The third most important reason for using an IOBSP was to secure financing (***) with the uncertainty generated by the health crisis.

Julie Bachet, ...

2.2 The French and mortgages

According to an Ifop survey in May ****, **% of those polled have taken out a home loan to buy their main residence, with as many loans lasting more and less than ** years.

Home loans in France

A buoyant property market almost necessarily implies more home loans, the primary determinant of demand for brokerage in this field. However, between January **** and August ****, the number of mortgages in France is set to fall sharply (***).

Growth in new housing loans for private individuals, CVS flows France, **** - ****, in billions of euros Source: ****

The volume of home loans for individuals granted on a monthly basis increased between **** and ****, following a sharp fall between **** and ****.

However, in ****, due to a less favorable economic climate marked by rising interest rates, the volume of new loans fell significantly to **.* billion. This trend looks set to continue into ****, with an estimate in June this year that new home loans to individuals will reach **.* billion euros.

Home loan production continued its downward trend in September ****, falling to *.* billion euros (***) from *.* billion in August. [***]

Home loans to resident individuals, change in outstandings (***), CVS France, **** - ****, in millions of euros Source: ****

The value of outstanding mortgages has risen steadily since ****, with growth of ...

2.3 The French and real estate: revitalizing territories

In ****, according to INSEE, **% of households will already own their main residence, and over the period ****-****, **% of French people said they had made an acquisition[***].

Housing stock

In January ****, there were **.* million dwellings in France, an increase of *.*% on **** and **.*% on ****. Here is the breakdown of these dwellings in ****[***] :

One tenth of the dwellings were second homes (***); In terms of occupancy, **% of homes were owned, **.*% were rented and the remainder were rent-free (***).

French real estate purchasing power

Real estate purchasing power refers to the number of square meters a household can acquire, based on the monthly payment it is able to pay and the number of square meters it can afford.the higher the monthly payment, the higher the borrowing rate, which benefits brokers.

Between **** and ****, real estate purchasing power in France fell by **.*%. However, three phases can be distinguished[***] :

A +**% drop between **** and ****, from ***m* to **m*. This period was also marked by rising property prices, +**% between **** and ****, with rates varying between *.*% and *.*% An increase of +**% between **** and ****, to reach **m* by that date. During this period, property prices fell by -*% and lending rates dropped from *% in **** to *.*% in ****. A **.**% drop between **** and ****, with purchasing power falling from ...

2.4 A very sharp rise in interest rates in 2023

After falling steadily since ****, interest rates exploded in ****. This dizzying rise continues in **** with a rate of *.*%.

Annual interest rate on new housing loans for individuals France, ****-****, in percent Source: ****

We can see that :

Early ****s: rates were around *% p.a. **** to ****: economic crisis triggered a fall in prices and rates to around *.*% over ** years Same trend until **** The situation improves towards ****, with various records (***) ****: health crisis and economic consequences, real estate weakened, ***,*** projects cancelled. In ****, the rate continues to fall, reaching *.**% in January In ****, due to rising inflation and ECB rates, the interest rate on new home loans to individuals rose significantly, reaching *.*% in January ****.

Credit renegotiation on the decline

The loan repurchase sector used to be a key vector of activity for mortgage brokers, with loan renegotiations being one of their spearheads, however, in recent years this activity has been declining overall. However, the month of January **** saw renegotiations increase by *.* points compared with January ****.

Share of renegotiations in total home loans to resident households France, ****-****, in percent Source: ****

Despite the continuing rise in new home loans, the loan renegotiation market collapsed in ****. Indeed, while the share of renegotiations reached **.*% in January ****, it represented only **% in July ...

3.1 Brokers, agents and ORIAS

ORIAS

ORIAS, the body responsible for the unique register of insurance, banking and finance intermediaries, is an association under the law of ****, under the supervision of the French Treasury, created in ****. Since the law of October **, **** on Intermédiaires en opérations de banque et en services de paiement (***), it has been a mandatory step in the mortgage brokerage business, as it is under this name that credit brokers are registered.

Broker and agent

It's important to distinguish between a broker and an agent:

Brokers act on behalf of their clients, without a mandate from a lending institution. To find the best credit repurchase offer, the broker must look for a lender himself or have his own network of agents. The agent: acts on behalf of one or more banks, or possibly a broker. Their role is to guide their clients through to contract conclusion.

In an abuse of language, the term "broker" is most often used, and this is also the case in our study.

Article R. ***-* of the CMF (***) classifies IOBSPs into four categories:

Brokers in banking operations and payment services (***): they operate on behalf of a client. They receive no commission from a credit institution, finance company, ...

3.2 A constantly growing workforce

Number of approved IOBSPs, i.e. registered with ORIAS :

Growth in the number of IOBSPs France, ****-****, in number of IOBSPs Source: ****

The number of IOBSPs in France has grown steadily since ****, reaching a peak of **,*** in ****. However, in ****, it recorded a decline for the first time of almost *% and then another decline in ****, revealing challenges facing the sector.

What's more, the proportion of brokers in a region is similar to the proportion of the French population, which is why the * regions with the highest number of IOBSPs were Île-de-France and Auvergne Rhône Alpes.

Source: ****

3.3 Distribution contact points

Mortgage brokerage can take two forms:

In person : in the traditional way, brokers meet with customers in their branch and explain loan solutions to them face-to-face. Online: customers fill in a form about their financial profile and borrowing requirements, and receive loan proposals without any physical contact. New digital solutions are offered, such as loan simulations before the customer even meets a broker. Sometimes, the customer doesn't even need to meet a broker; everything is done over the internet, like the start-up Pretto launched in ****.

Distribution channels for mortgages France, February ****, in percent Source: ****

Just under half of all mortgages are arranged through brokers (***). There are also *% of French people who went through a bank, but obtained information from a broker's website.

The digital platforms that offer these services attract customers by offering free brokerage (***), and sometimes allow the broker to concentrate on advice rather than calculations. This is the solution offered by Immofinances.net, for example.

However, the dematerialization of brokerage is not universally acclaimed ; there is a strong resilience of physical brands and a consumer aspiration for greater quality in customer relations (***). [***]

Young people under ** make more use of a broker than the average French person, but **% of them ...

3.4 Market players: independent brokers resist a powerful trend towards concentration

The mortgage brokerage market is essentially structured around two types of players: the big names on the one hand, and small, independent, local companies on the other.

In recent years, there has been a trend towards concentration among mortgage brokerage firms, driven by the sector's big players seeking to consolidate their assets. [***]

Indeed, national leaders or their challengers are not hesitating to acquire smaller companies in order to secure significant market share: this was the case with Meilleurtaux, which bought Préféo in ****, or Financière CEP, which acquired Empruntis and Immoprêt in ****. Another example is Vilavi (***) is currently the most dynamic and ambitious player on the market, with numerous acquisitions and a multi-channel strategy aimed at leveraging both physical and digital sales to ensure volume and quality of customer relations. [***]

However, the smaller brands are holding their own thanks to a strong local presence, the reputation it generates and the customer relations it fosters. Many of these brokers havejoined forces to form a national group of independents, J'aime mon courtier. The growth of the market and the resilience of small structures are accompanied by increased use of the franchise system.

4.1 Broker revenue structure

In most cases, brokers are remunerated in two ways:

Bank commission: ranging from *.*% to *% of the total loan, paid by the bank to the broker as a business introducer. There may also be certain ceilings and floors depending on the total amount borrowed. Fees: paid by the customer as a lump sum or percentage of the loan. The special feature is that the broker may not receive any payment from the customer until the loan has been obtained(***). If the financing solution does not suit the customer, the latter is not forced to accept, and has nothing to pay to the broker.

The various costs to be borne by the borrower

Source: ****

An article in the French newspaper Capital, published in January ****, on nine of France's leading credit brokerage brands summarizes their pricing policies.

Source: ****

The table shows that price differentiation is mainly based on the borrower's fee, with bank commissions invariably running at around *%. It's also worth noting that some brokers choose not to charge their customers any fees at all: this is especially true of online brokers.

4.2 Realized margins

Costs associated with the mortgage brokerage business tend to vary widely, depending on the size of the structure. Nevertheless, the business quickly becomes attractive: set-up costs would rise to **,*** euros, and the break-even point would be reached with around ** financings per year. [***]

In addition, and particularly in the case of a franchise brokerage, the management of documentation and equipment (***).

For their part, customers often make significant savings on their entire loan, including the broker's fee: several thousand euros over **-** years in general. [***]

The meilleurtaux.com website offers a highly intuitive loan simulator that lets you quickly see how much you can save on a mortgage by varying the interest or insurance rate.

as a purely theoretical example, the table below shows the savings achieved by changing froman interest rate of *.*% to *.*% on a conventional loan, for different loan amounts and terms:

Source: ****

Example of calculation for a loan of €***,*** over ** years:Simply go to the site, fill in the above information, and run the calculation once with a *.*% interest rate and once with a *.*% rate, to obtain the cost of the loan: €*,*** for a *.*% rate, €*,*** for a *.*% rate. To calculate the savings, simply calculate *,*** - *,*** = €*,***.

4.3 Broker comparisons

Comparison of some real estate brokersFrance

Source: ****

All brokers operate in mainland France, but some are also present overseas, particularly those offering an online service.

The main element negotiated by the mortgage broker is the interest rate. He or she often works on the basis of rate grids based on the customer's financial profile, as well as the amount and term of the loan. These grids are provided by the various banks with which he works, but he can also negotiate beyond these grids.

Partner banks: Brokers have partnerships with many banks, but the latter have begun to question these partnerships with brokers, no longer seeing them as a profitable opportunity. For example, mutual banks announced in **** that they no longer wanted to pay *% commission on each file, even though their local market share can be very high. In the same vein, Crédit Agricole Languedoc (***) terminated all its contracts with brokers, deeming that they had no need for broker sourcing. At Crédit Mutuel Arkéa, however, they expressed a desire to continue working with brokers, but stressed the need to ensure that that the partnership suits both parties, implying that brokers submit good quality files, that there is a ...

4.4 Real estate prices

It's worth keeping an eye on real estate prices for a broker:

By property

Variation in price indices for older homesFrance, **** (***), in percent

Source: ****

Prices of older homes have fallen by *.*% over the past year in France as a whole. Houses and dwellings in the Île-de-France region have seen the biggest drop over the past year, with a *.*% decline.

By geolocation

Property prices France, October ****, in euros

You can find the prices of old houses and apartments per square meter for a region, department or town here.

property price trends October **** : [***]

** years * years Year to date * month Index in points Paris (***) **,*% *,*% -*,**% -*,**% ***,* Top ** major cities **,*% **,*% -*,**% * ***,* Top ** major cities **,*% **,*% -*,**% *,**% ***,* Rural areas **,*% **,*% *,**% * ***,* France **,*% **,*% -*,**% * ***,* In October ****,the downward trend in Paris prices intensified, with a further decrease of *.*%. As a result, the average price per square meter in the capital now stands at *,*** euros, moving a little further away from the symbolic **,*** euro mark. Over a twelve-month period, prices fell by an average of *% in the City of Light, affecting all arrondissements except the *th, where they rose by *%. The steepest falls were recorded in the **th (***). The price correction is even more pronounced in other conurbations. Among the ...

5.1 Overview

Since the real estate crisis of ****, regulations have had a major impact on the brokerage business.

On the one hand, the Basel III accords published on December **, **** imposed limits on risk-taking by banks, leading to the withdrawal of specialized banks from the brokerage segment. [***]

On the other hand, in France, the regulations governing Intermédiaires en Opérations de Banque et Services have given brokers greater legitimacy by controlling access to the profession (***). In particular, the new rules introduced in January **** require brokers to obtain an attestation of professional competence before they can be registered with the Registre des Intermédiaires run by ORIAS.

Lastly, restrictions have been placed on remuneration and partnerships between banks and brokers: a broker may not carry out more than **% of his transactions with the same banking institution.

In this way, the legislation has encouraged intermediation in these operations, creating an air gap in the profession and triggering an influx of players into the sector.

5.2 Some rules applicable to the IOBSP profession

The Association Professionnelle des Intermédiaires de Crédits (***) provides a complete and succinct overview of the applicable rules and current legislation governing the profession and activity of real estate loan broker.

Non-cumulation rule

Pursuant to article R. ***-* II of the CMF, except for banking operations of a different nature (***) or the provision of payment services.

It is also forbidden to integrate more than two IOBSPs between the bank and the customer: The second intermediary can therefore only be an IOBSP Agent.

VAT exemption

Article *** C, *° of the French General Tax Code exempts "the granting and negotiation of credit" from VAT. Consequently, customer fees or bank commission paid in connection with a credit intermediation transaction are exempt from VAT.

On the other hand, commissions paid to a contributor not involved in the intermediation transaction (***) are subject to VAT.

In addition, the advisory services provided for under article L***-*-* of the French Monetary and Financial Code are not considered to be credit negotiation, and are therefore not exempt from VAT.

Remuneration after loan release

The MURCEF Act, law no. ****-**** of December **, ****, prohibits brokers from collecting any sum of money before the loan is released, whether in the form ...

5.3 Texts governing the IOBSP profession

The main text framing this activity is available in articles L.***-* et seq. of the Monetary and Financial Code, as well as articles R.***-* et seq.

The Order of June *, **** relating to Article L.***-* of the Monetary and Financial Code gives a nomenclature of the diplomas required to carry out the activity of IOBSP.

Directive ****/**/EU of February *, ****, known as the MCD, relates to consumer credit agreements for residential real estate and amends Directives ****/**/EC and ****/**/EU and Regulation (***) n°****/****.

The decree of June **, **** sets the amount of guarantees in civil liability insurance contracts and the minimum amount of surety bonds for intermediaries in banking operations and payment services.

Decrees ****-*** and ****-*** of January **, **** relate to the registration of IOBSPs and Intermédiaires en Opérations de Banque e Services de Paiements.

Finally, according to the Autorité de contrôle prudentiel et de résolution(***), the latter "may in particular submit to its supervision any intermediary in banking operations and payment services."The rules defining intermediation in banking transactions are set out in the "Loi de Régulation Bancaire et Financière" of October **, ****, which precized the status of intermediaries in banking operations and payment services, with ...

6.1 Segmentation

• Cafpi
• Vousfinancer
• Credixia
• In&Fi
• La Centrale de Financement
• KG Crédit
• Idésia
• SoCrédit
• Immofinances.net
• Empruntis
• Meilleurtaux
• Vilavi Groupe (AB Courtage)
• PresseTaux
• Emprunt direct
• Pretto
• Artemis Courtage
• Solutis
• Prêt Partners
• K Finances
• 360Brokers
• Lucya
• Kereis (ACE Crédit, Empruntis, Immoprêt)
• Premista