Real estate credit: this change wanted by the banks that could cause the usury rate to jump

The dropout rate was increased on 1 October for the next three months. But this revaluation, set at 3.05% for loans with a duration of 20 years or more, remains insufficient in the eyes of some banks that envisage a new solution.

Despite the long-awaited revaluation on 1 October, the usury rate – the maximum threshold beyond which banks are not authorized to grant credit – remains at the center of debates.

The latter is set for the next three months at: 3.05% for loans with a duration equal to or greater than 20 years and 3.03% for loans with a duration of less than 20 years. Previously, the dropout rate was set at 2.57% and 2.60% respectively. If this increase allows some subjects whose financing was blocked until now to finally be able to obtain a mortgage, this remains insufficient for various players in the sector. And for good reason, this file locking phenomenon is likely to continue for a while. The reason is that bank mortgage rates also continue to rise at the same time in the wake of the rise in 10-year OATs, French state loans that serve as a benchmark for banks to set their lending rates.

According to the words of a banker reported by the echoes , the usury rate slows down credit production. “The wear rate is currently around 3%, 1.10% is missing to be able to work. It should be above 4%. At the current rate, we will get there in July 2023 ”.

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The problem reported by the industry is that the usury rate is an “overall” rate. This means that it takes into account not only the nominal rate of the credit, but also the borrower’s insurance as well as the various additional administrative costs, which inflate the rate. However, the Echoes say this could change in the weeks to come. Exchanges on the subject have been ongoing since September between the Banque de France and the banking institutions. The latter want me to change the method of calculating the usury rate: by integrating no longer the average rate granted for three months plus a third, but all the offers made to households by the banks.

Observers point out that the usury rate lags behind the current state of the market. Indeed, this is it calculated on the basis of the credit rates granted in the previous quarter. “By calculating the usury rate on the basis of the rates indicated at the time of issuing the loan offer, and not on the rates recorded at the time of the irrevocable signing of the credit, we would stick more closely to the evolution of the market, the professionals call. In fact, between the offer of the loan and the signing of the loan, it generally takes 10 to 30 days ”, emphasizes Les Echos.

Based on the offers made e more recent data, the churn rate could then increase faster and allow for more file acceptance. Mechanically, this would also raise mortgage rates in general. A double-edged solution for families.

According to Les Echos, “discussed in an ad hoc working group with the Banque de France and the Banking Federation, the idea is gaining momentum”. For its part, the Banque de France has already given up a point this summer, as it agreed to rely on the lending rates achieved in the last month of the quarter, and no longer on the average of the last three months. Despite everything, he confirms that “the decision at the end of September has shown that the current rule and method of calculation have worked well”. Keep on.

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