Will the October Usury Rate Review Change Nothing?

As expected, the new dropout rate will take effect on October 1st. But the president of the Banque de France, François Villeroy de Galhau, has just announced that the calculation formula will not be revised.

The authorities don’t want to change anything

They have been warning for weeks but the voices of real estate professionals have not yet been heard. They have been warning of wear rate problems for months. This rate is too low compared to the real estate rates banks have to charge, lending refusals are on the rise.

Brokers claim that the number of loan refusals reaches 45% of cases. On BFM Business, Bérengère Dubus, secretary of credit intermediaries, recently noted that it is not only brokers who are ringing the alarm bell: “Notaries rang the alarm bell about 3 weeks ago. The real estate world is on the alert and the CEO of Crédit La Mutuelle has sounded the alarm. It is not just the brokers, but everyone in the real estate sector who is worried and worried, including the borrowers ”.

Rising bank interest rates make it difficult to obtain bank loans today. Whether people are on low or high income, they face this infamous dropout rate.

Éric, a 56-year-old Clermont commercial, was also refused a loan application. “I have five times the amount of my real estate purchase in my accounts, have a more than comfortable salary and have been working for the same company for twenty-one years. I don’t understand. “

One solution might be to modify the wear rate formula to better reflect actual conditions. But as in July, the president of the Banque de France refused. On RTL, François Villeroy de Galhau said that “French mortgage credit is doing well”.

“The existing calculation formula will be applied at the end of the month and will result in a corresponding increase,” he added. “This could solve the cases that have made it more difficult to get a mortgage in recent weeks,” she said.

A stuck situation that shouldn’t get better

Many are the “victims” of too low a usury rate. We remind you that this is the maximum rate (APR) at which a bank can lend, which includes the nominal rate, insurance, mandatory guarantees, and any administrative costs, the cost of credit.

According to an Opinion System survey of brokers called to demonstrate before the Banque de France on September 20, 45% of mortgage applications were rejected. While all interest rates are rising as part of an inflation-fighting monetary policy, the Banque de France’s usury rate, set every three months, appears disconnected from the rest of the market, real estate professionals said.

“The first excluded were the young people with the lowest contribution; then we had the elderly, because of the insurance, explains Maël Bernier, spokesperson for the broker Meilleurtaux. Now I have blocked the files of people aged 45 with a contribution of 300,000 euros and who earn 12,000 euros a month. They cannot borrow because with a rate of 1.85%, you add the insurance plus the guarantee that goes into the APR and you overcome the usury. According to Maël Bernier, there is an urgent need to reform the usury rate. “The last time we had rates at 2%, we had a usury rate at 4.20%.”

Brokers and bankers fear that the October usury rate hike will not be enough compared to the previously recorded and future rate hikes. Many files are likely to remain locked until the end of the year.

Please note that the usury rate is the maximum rate fixed and updated quarterly by French banks to which the banking institution has the right to lend. The current rate for 20 years or more is 2.57% and takes into account ancillary costs and insurance for future loans.

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