Brokers claim that 45% of files are rejected today due to wear rates that are too low. “This figure is very unlikely (…) I deny it,” François Villeroy de Galhau told BFM Business. Who is wrong, who is right?
Are Usury Rates Blocking the Market or Not? On the one hand, brokers claim that 45% of files no longer go through. The fault lies with the rise in nominal bank rates, which are now around 1.85% on average in 20 years. et al ‘vice that are formed, increasingly narrow, with the rate of wear. The latter is the maximum rate, fixed and updated quarterly by the Banque de France, at which banking institutions have the right to lend. It is now at 2.57% for periods of 20 years or more and takes into account ancillary costs and insurance for the future loan.
A strangulation that François Villeroy de Galhau does not notice. “The real estate loan remains very dynamic, we are at a growth of over 6%”, he said on BFM Business. “Rates are gradually rising. In July we averaged 1.45% (…) Rates remain very favorable and the mortgage remains very well funded.” And he added regarding the rejection rates: “This figure is not very credible (…). I deny the figure of 40 or 45% of rejection”.
Where is the reality? First of all, it must be understood that the intermediaries and the governor of the Banque de France do not have the same temporality. When the governor talks about a 6% growth or a 1.45% rate, he talks about the credits that have actually been signed. So negotiated two or three months earlier. More specifically, as underlined in the latest press release issued at the beginning of September by the Banque de France on the subject of existing real estate mortgages (i.e. all the loans that remain to be repaid to families, and which have been taken out in recent months or several years ago) increased 6.4% yoy in July (and 6.3% yoy in August). But the amount of new home loans is in sharp decline, to 20.6 billion euros last August against 23.8 billion euros in August 2021, according to first estimates. This is a decrease of 13.4% in one year.
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Furthermore, the figure of 1.45% on average for loans corresponds to the TESE (actual rate in the strict sense). However, the usury rate cap does not refer to this rate but to the TEG (rate of charge), also called the APR (annual rate of charge). And in its statement, the Banque de France itself states that “by adding 60 basis points (0.60 percentage points, ed.) The average value corresponding to the transition from TESE to TEG, the average rate remains significantly lower than the usury rate”. in other words, the July TEG (according to the Banque de France) is already actually around 2.05%.
The Housing Credit Observatory / CSA, which serves as a benchmark in the industry, for its part estimates that the average rate of new loans (excluding taxes and insurance) was 1.82% in August. But again, these are the credit rates actually issued, not the current market rates.
Brokers, on the other hand, talk about the offers at the moment T. “Average rates are still increasing at 1.5% over 15 years, 1.75% over 20 years and 1.90% over 25 years, but now more banks are recording rates above 2% over 20 and 25 years “, notes the broker Vousfinancer for the month of September. And it is still necessary to add the borrower’s insurance rates as well as the filing costs in order not to exceed the rate of wear.
Credit files filtered upstream
Thus, the governor of the Banque de France notes that the applications actually refused. The files which have been studied by a bank and which after analysis have been rejected. But today many files do not even pass this stage. Banks reject them before the analysis, only because on the simulation the APR exceeds the usury rate. These files rejected even before analysis are not counted. If the governor of the Banque de France does not see them, the intermediaries see them.
Sandrine Allonier, who takes care of Vousfinancer’s communication, specifically for BFM Immo: “The practices are filtered at different levels, which explains why at the end of the chain, real estate agency networks such as L’Adresse do not only make 20% of the compromises are was broken this summer due to the refusal of a loan. First of all there is the self-censorship and the wait-and-see attitude of potential borrowers who postpone their project for fear of not being able to borrow. Then the filtering of the broker : in some agencies 70% of the simulations during the 1st meeting do not pass the usury … therefore the practices are not presented or not in the state Then, the refusal of the banks to take or study the practices because it is higher than usury and finally, the actual refusal of the banks but the dossier can then be presented a 2nd time if they ask, for example, for a greater contribution, or with another editorial staff, or revisable … And all of a sudden door he will still come to an agreement, but François V Illeroy de Galhau would not have known that it could have been a refusal without the effort of the broker or the banker, an effort that not everyone makes. This is why the notion of rejection rate differs depending on the actors and the number of filters that were applied to the file before it arrived on the banker’s desk.
And this refusal to study the practices by the banks is a real problem. Not only will the individual not receive their loan, but they will also not receive their official rejection letter. However, very often, there is a clause in sales contracts that obliges the buyer to obtain more rejection letters if he does not have a loan, otherwise he will pay a percentage of the sale price (often around 10%).