The usury thresholds applicable to home loans drop from 1uh April 2021. This decline in usurious rates is not necessarily good news for the elderly or the sick, profiles considered “at risk” by banks.
For 8 out of 10 French people, financing the purchase of an apartment or house requires the use of a loan. In order to protect those who borrow money from banks, the legislator has established a usury threshold, or a maximum Effective Annual Rate (APR) beyond which an institution is prohibited from lending money, under penalty of litigation. To calculate this usury threshold, the Banque de France collects the average effective rates charged by credit institutions plus a third.
Published in the Official Gazette at the end of each quarter for the next 3 months, the wear thresholds they vary according to the categories of loans (consumer credit, home loans, overdrafts, revolving credit, etc.), the amount borrowed and the duration. For the 2And quarter of 2021, usury rates are declining, especially for terms of 20 years and beyond, which are the most common.
Lower wear rates
Thus, for the second quarter of 2021, usury rates fell compared to the first three months of the year, reaching 2.52% (previously 2.56%) for fixed-rate mortgages with a duration of less than 10 years, at 2.52% (previously 2.57%) for loans with a maturity between 10 years and less than 20 years and 2.60% (previously 2.67%) for loans repayable over 20 years or more.
Bad news for the most fragile borrowers
If the principle of the maximum rate is considered favorable to the consumer, in the current context, a generalized increase in rates entails the risk of exclusion from the loan of some borrowers for whom the proposed rate will exceed that of usury, according to Julie Bachet, administrator Vousfinancer delegate.
Furthermore, usury rates are too low to take into account the diversity of borrower profiles. For example, over 20 years, depending on income, the nominal rate offered by a bank varies from 1.15 to 2% over 25 years depending on income, with insurance rates ranging from 0.26% for children under 30 years at 0.53% for the over 50s, plus administration costs of up to € 900, according to Vousfinancer.
Given these significant rate differences, some borrowers may get bids above the usury rate. These are in particular the riskiest profiles in terms of health (elderly, aggravated risks) and those to whom we recommend taking out insurance at 200% or taking out job loss insurance, the rate of which could even exceed the usury threshold. due to the very high weight of the insurance in the APR.
“Even low-income borrowers may be further affected by the rate differentials applied by banks based on income and contribution,” concludes Sandrine Allonier.