What if the euphoria of the housing market is drawing to a close? As prices and the number of transactions have reached record highs since the start of the Covid pandemic, borrowers are now faced with an increasingly obvious problem: access to credit. In fact, average loan rates are steadily rising: after dropping below the symbolic 1% threshold in December (for 20-year loans) according to the Crédit Logement Observatory, they are flirting here or even exceeding the bar. 1.5%, many brokers report. Most of them are also counting on an inevitable continuation of rate hikes, which could thus reach 2% or more by the end of 2022. The consequences are evident for buyers: the cost of credit risks, barring an unforeseeable reversal, of explode within a year.
But above all, in addition to costing more, mortgages are now simply … inaccessible to many families. In fact, there is a Global Effective Annual Rate (TEAG), more commonly known as the usury rate, beyond which it is legally impossible to grant a credit line. In the second quarter of 2022 this rate was set at 2.4% for home loans starting at 20 years. However, this maximum rate takes into account the cost of the all-inclusive credit, i.e. it includes the borrower’s insurance, administrative fees or even brokerage fees. The accumulation of these costs, for the more fragile practices, often becomes prohibitive to obtain a loan. This effectively excludes many borrowers from the credit market.
The Société Générale and the Crédit du Nord suspend part of the files
In this context, average rates are so close to usury rates and the margins expected by banks are so low on these files that some now prefer… to limit the number of loans they make. According to our information, this is how two establishments, Société Générale and Crédit du Nord, temporarily suspended credit production with brokers. Brokers who, according to the Professional Association of Credit Intermediaries (APIC), accounted for between 37% and 40% of the cases filed by borrowers in 2021. “Société Générale continues to offer loans to its clients, examining their personal situation on a per-case based case ”, the banking institution merely communicates. However, Société Générale and Crédit du Nord refuse to confirm or deny that they have suspended the issuance of credit to brokers’ clients, despite our reminders. “I can confirm that these two banks have suspended the production of credit through intermediaries”, however, insists a first professional in the sector. “Two major banking institutions have just decided to stop accepting files due to this regulatory hurdle,” explains a second actor.
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Other banks, more malicious, do not officially suspend the practices … but offer grids of rates so high that in practice it becomes very difficult to borrow them. “Some establishments have tariff schedules at 2.10%: gold, at these levels, becomes very difficult to complete the paperwork”, so decodes the representative of a large brokerage network. “Bank grids are changing very rapidly and their offers are valid for a very short time: borrowers have to sign up very quickly if they get a loan,” this broker now advises its clients.
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