new rate hike in November, usury rate limit

While many borrowers are already struggling to get a mortgage, the trend isn’t improving in November. Rate hikes continue and this on all hard.

No good surprises for borrowers on the mortgage component. As in previous months, rates continue to rise. An increase that is not surprising, as the cost of money also increases. Indeed, the 10-year OAT, an equivalent Treasury bill, a French government debt security that serves as a benchmark for banks to set their credit rates, fluctuated between 2.4% and 3.02% in October. Inevitably, depending on their capital needs, banks pass this increase on to their credit rates.

However, the banking institutes, blocked by the usurious rate, cannot raise rates as much as they want. We recall that the usury rate is the maximum rate above which a bank cannot grant loans. Fixed 3.05% until next January 1 for loans of 20 years and more, it includes the credit rate, the borrower’s insurance and various commissions.

2.50% on average over 25 years

If the usury rate is fixed until 31 December, the bank resizes, instead, it will definitely continue to progress given the levels of bank refinancing rates on the markets, observes Olivier Lendrevie, president of the Cafpi brokerage. We can expect rates close to 2.50% at the end of the year, as the usury rate ceiling does not allow for a higher increase.

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A view that seems to be confirmed by the latest data from the Meilleurtaux broker, which reports a average rate of 2.49% for loans with a duration of 25 years. Same story from Pretto in this period (2.49% on average). Borrowing is slightly more optimistic, with an average rate of 2.35% over the longer term.

Average rates in banks in early November

    • ON 15 years: 2.16% according to Meilleurtaux; 2.05% for Loans; 2.21% according to Pretto.
    • ON 20 years: 2.30% according to Meilleurtaux; 2.20% for Loans; 2.33% according to Pretto.
    • ON 25 years old: 2.49% according to Meilleurtaux; 2.35% for Loans; 2.49% according to Pretto.

    Average rates recorded by the intermediation networks, based on the scales provided by the banks. They do not take into account the cost of the borrower’s insurance.

In detail, the average rates provided by Meilleurtaux are like this up 30 basis points month over month, no matter how tough it gets. And all the data collected by brokers is unanimous: all rates have now exceeded 2%. An increase that could continue in the coming months, according to Olivier Lendrevie: these increases of around 0.50% per quarter should continue until credit rates reach a level compatible with banks’ refinancing costs. In the current state of the financial markets, we estimate this landing point to be around 3.50%.

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