Le taux d’usure en pratique et ses conséquences pour les emprunteurs

Le taux d’usure en pratique et ses conséquences pour les emprunteurs

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Falling equity markets and their high volatility coupled with runaway inflation could have pushed the real estate market to record highs, a particularly attractive alternative to the equity market in this context. In reality, the latter is rather half-staff, and the question on everyone’s lips is whether the decline will be long-lasting and widespread. It must be said that the rise in reference interest rates and the timid increase in the usury rate have expelled a large number of individuals from the market who see their mortgage application denied. Find out in this article what the attrition rate is, its level, its consequences on the mortgage market.

What is the wear rate?

The usury rate is the maximum rate at which a bank can lend money. The APR (Global Effective Annual Rate), which corresponds to the total cost of the credit, is regulated. There is a maximum limit set by the Banque de France that must not be exceeded because this crime is punishable by a prison sentence of 2 years and/or a fine of 300,000 euros.

Each type of loan has a separate attrition rate (home loan, consumer, overdraft, etc.). In this article we are going to focus on the mortgage attrition rate, which is currently having a strong impact on individuals with a real estate project.

The attrition rate corresponds to the average rates actually granted during the previous quarter, plus a margin of one third (note that the mortgage attrition rate obviously varies according to the duration of the loan). This new attrition rate is then applied for one quarter. From July 1, 2022, a new usury rate comes into force: it amounts to 2.60% for loans of less than 10 years and loans with a duration between 10 and 20 years, 2.57% for loans of more than 20 years. years and 2.99% for bridging loans

Also read: Real estate credit: 3 rules to follow to see your loan accepted in 2022

Real estate credit: the scissors effect deciphered

At the same time, inflation encourages central banks to raise their reference rates to curb consumption and investment by families and companies in order to break the spiral of rising prices. However, the key rates correspond to the rates at which central banks lend money to banks. Once in negative territory, these rates are on the rise and should continue to rise in the coming months. The banking establishments, naturally, transfer this increase in the cost of the loan to the loans they grant. Thus, we are witnessing an increase in mortgage interest rates.

This schedule of rate hikes poses a real problem for borrowers: on the one hand, mortgage rates rise rapidly every month; on the other hand, the increase in the usury rate increases little and only every quarter, creating a lag of three months that particularly harms borrowers facing the scissors effect: interest rates on loans are higher and higher when wear rates are kept relatively low. We are currently witnessing an increase in refinancing rates but also an increase in interest rates on public debt, around 2%, that is, a return to its level in April 2014, when mortgage rates were around 3.3%, with an attrition rate of 5.19%. Remember that today for loans over 20 years, the attrition rate is 2.60%, well below what was practiced at the time when key rates were comparable.

Attrition rate: the winners and losers of the particular context of the summer of 2022

The current level of usury rates is hurting both banks and borrowers. Indeed, the insufficient increase in the usury rate, due to the 3-month lag and the sudden sharp increase in key rates, does not allow banks to offer rates that allow them to generate a sufficient margin, where there is a massive rejection of mortgage applications. It should also be remembered that banks cannot accept a mortgage file if its monthly payments exceed 35% of the income of the borrower(s).

The profiles most affected by these refusals are first-time buyers with low prices and modest incomes (often young). The least affected by this scissors effect are borrowers with a strong contribution, comfortable income and/or a short credit period (often seniors). According to a recent study by Pretto, 18% of the files financed in 2021 would no longer be eligible for financing in the market context of June 2022, which represents 220,000 households.

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