A survey conducted by several intermediary associations aims to show that more and more lines of borrowers are rejected due to the usury rate and the debt rate. And the most affected are 30-55 year olds.
We no longer teach you anything, obtaining a real estate loan today is increasingly an obstacle course. An investigation into the opinion system (1) commissioned by 6 professional orders of intermediaries in banking and payment services (IOBSP) highlights the obstacles to their business, which are in particular the usury rate, the maximum rate above which a bank cannot lend, and the standards in force from 1 January, requiring, for example, a maximum debt ratio of 35%.
And the result speaks for itself, given that according to some brokers interviewed 4 out of 10 files would not pass today. We have never been faced with so much rejection on our files submitted to banks. For 40% of our intermediaries, 40% of files are rejected and for 85% the rejection rate exceeds 20%, observes Bruno Rouleau, president of the Professional Association of Credit Intermediaries (APIC). 71% of refused loan applications aimed at purchasing a primary residence. First reason for refusal: the wear rate for 36% of the files, followed by the new obligation of compliance for 31% of them.
The refusals concern borrowers between the ages of 30 and 55
In an effort to solve cases, banks are increasingly asking brokers to lower their fees. Thereby, 18% of banks ask for it systematically and 43% ask for it often. The goal is to lower the annual effective rate (APR) of the credit below the usury rate, set at 2.57% for loans starting from 20 years (2.60% for shorter periods). However, according to the survey, only 15% of the files rejected by the banks are related to the fact that the practice comes from a credit intermediary.
While it might be thought that withdrawals are the most affected by the phenomenon, in particular due to the cost of the borrower’s insurance, 51% of the practices refused concern applicants aged between 30 and 55. The dropout rate has become the main problem for access to finance, and concerns all borrowers, whatever their age or project, Bruno Rouleau advances further. This is why we want to alert, with the whole profession, the risk of exclusion of an increasing number of buyers with the consequence of a blockage of the real estate market.
The situation is absurd … These French have deprived their real estate loans because of the usury rate
At the end of June, a source close to a member of the Higher Council for Financial Stability, a body chaired by the Minister of Economy, explained that there is no there is not enough data at this stagedespite the evolution of tariffs, to signal a problem of systemic access to real estate credit.
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Don’t be fooled by the statistics for the production of new credits for the 1st quarter of the year, that mainly accept files accepted in late 2021 or early 2022, against Bruno Rouleau. The sharp slowdown we are experiencing will be reflected in the data in the autumn, with strong inertia before a possible restart in 2023 and which will be spread over several months.
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(1) Online survey of 1,417 interim credit respondents between 8 July and 22 July 2022.