Obtaining credit has become an obstacle course. Many loans are turned down because of the level of the usury rate, the ceiling designed to protect individuals from abusive borrowing terms. It currently stands at 2.57% for 20-year home loans, all costs included, including borrower’s insurance and any brokers’ commission. The attrition rate will be raised on October 1, “well proportionate and more marked than last June, in agreement with the Minister of Economy and Finance”, underlined the Banque de France in a press release. An insufficient gesture in the eyes of brokers, who accuse it of considerably hampering access to real estate credit, becoming an additional obstacle for borrowers.
“We do not yet know by how much the wear rate will be raised, according to estimates between 2.95% and 3.15%, but this increase will not change much”, deplores Ilan Rainier, associate director of Vousfinancer joined by L’Express, present at the event organized on September 20 in Paris. The specialist describes the following mechanism: as soon as the usury rates go up, the banks will raise their rates as they had done in July, which will once again block the borrower. Due to the rise in key interest rates and inflation, banking establishments are themselves borrowing at significantly higher rates. “Banks lend at 2%. If the usury rate rises to 3% and they lend at 2.40%, it will come back to the same,” sweeps the broker.
The calculation of the rate of wear is carried out each quarter by the Banque de France, which takes into account the average rates applied by the banks during the last three months, increased by a third. But with the rise in interest rates, the mechanism activates a perverse effect on individuals, because it is now too low compared to the reality of borrowing rates. Last July, the usury rate rose from 2.50 to 2.60%, while average borrowing rates soared from 1.30 to 1.90%.
Result: many people find themselves excluded from the capacity to buy, the bank not being able to make credit if this rate is exceeded. According to figures from the online broker Pretto, the number of borrower files that exceed the attrition rate stood at 24% in April 2022, compared to only 4.3% in 2021. “Whether households modest or senior executives, everyone is targeted by the usury rate and by this blockage that is being made by the banks at the moment (…) I have many customers who have been refused at the bank, while these are files that normally meet all the debt criteria”, informs Ilan Rainier.
For his part, the Governor of the Banque de France, François Villeroy de Galhau, remains on his positions. During the meeting with the representatives of the Union of Credit Intermediaries (UIC), one of the main unions in the profession, he recalled “that the role of the Banque de France was to calculate the rate of mortgage wear and tear on the basis of the provisions set by law to protect borrowers”. In other words, figures revised upwards, but no boost.
For Ilan Rainier, the solution would be to take an exceptional measure to increase the usury rate set at 3.40% or 3.50%, which would allow banks to lend more and open the floodgates for borrowers. In the long term, the specialist wants to maintain the usury rate, “which prevents people from being scammed”, but he recommends a change in the method of calculation so that the rise in interest rates is reflected more quickly on wear rates, adjusting it every month. The goal being “to be a little more specific and to mitigate the effects on obtaining the loans”, he says.
On his MeilleurTaux site, the spokesperson, Maël Bernier, advises lowering the cost of insurance to allow his file to go through the banks, and thus try to counter a “really very complicated situation”. If brokers are so concerned about the usury rate, it is because they fear that the real estate machine will jam: “if borrowers cannot continue to buy, real estate prices will theoretically fall, causing a snowball effect.
The Banque de France and Bercy do not, for the moment, share brokers’ concerns about the state of the real estate market. In an interview with the Sud-Ouest newspaper on Sunday dated August 21, the Minister of the Economy, Bruno Le Maire, indicated that the real estate market remained “dynamic”. An assertion taken up in stride by the Governor of the Banque de France, who indicated in the columns of Ouest-France that the real estate sector was today “properly financed”. The outstanding amount of housing loans was indeed up in July, according to the latest figures from the Banque de France.
