New on this Wednesday, March 1st. The usury rate, the maximum authorized rate above which a bank cannot lend, increases to 4% for loans with a duration of 20 years and more.
Good news for mortgage applicants. According to a opinion of February 25, 2023 published at Official newspaper, the usury rate, the maximum all-inclusive rate above which a bank cannot lend, will reach the 4% mark on March 1, for loans with a term of 20 years or more, against 3.79% in February. Loans ranging from 10 to 20 years cannot exceed 3.87%, and loans with a duration of less than 10 years are blocked at 3.67%.
| Categories | Average effective rate practiced during previous three months March 1, 2023 | Wear rate applicable to March 1, 2023 |
|---|---|---|
| Real estate loans | ||
| Fixed rate mortgage loans | 2.75% | 3.67% |
| Fixed rate mortgage loans ≥ 10 years and | 2.90% | 3.87% |
| Fixed rate mortgage loans ≥ 20 years | 3% | 4% |
| Variable rate home loans | 2.84% | 3.79% |
| Bridging Loans | 3.08% | 4.11% |
| ready for consumption | ||
| Loans for consumption of an amount less than or equal to 3000 euros | 15.43% | 20.57% |
| Loans for consumption of an amount greater than 3000 euros and less than or equal to 6000 euros | 7.95% | 10.6% |
| Consumer loans of an amount greater than 6000 euros | 4.61% | 6.15% |
This category also includes credit resulting from a consolidation comprising one or more home loans whose share exceeds 60% of the total amount of the consolidation operation.
As a reminder, the Banque de France, in agreement with the government, has decided to monthlyize the wear rate from February 1 to July 1, 2023, while the latter is normally reviewed every quarter. Supposed to protect borrowers, it includes loan insurance, guarantees and administration fees. For its calculation, the Banque de France is based on the average of the credit rates (taking the APR, the all-inclusive rate of the credit) of the last 3 months and the increase of one third to fix the rate of wear of the month following.
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Credit rates that are likely to increase
Why this change in the method of calculation? While the production of real estate loans fell over one year, with 14.4 billion euros in new housing loans in January 2023 against 23.7 billion euros in January 2022, the wear rate was singled out, accused of blocking many borrowers, in particular because of too large a time lag in the method of calculation.
If the increase in the usury rate will give air to borrowers, it may also participate in the rise in interest rates. While the average rate of a 20-year loan has already increased from 1% in February 2022 to 2.90% in February 2023, many observers expect to see rates exceed the 3% mark, or even 3.5% , by summer 2023.
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