Because of him, one out of 5 mortgages is refused in France. “Him”? The rate of wear. This word certainly means nothing to you, unless you have a real estate project in mind and you have spoken to your banker about it. Because this somewhat barbaric term often comes up in the mouths of credit professionals. This is the credit rate (with insurance and application and guarantee fees) beyond which banks cannot grant a loan. However, this rate continues to decrease – it is currently 2.4% against 2.67% at the start of 2021 – while the average credit rate gallops at the same time (1.51% over 25 years against 1.09% early 2022).
Consequence: the gap is reduced between the two curves (see the graph below). In this case, it is around 0.9% for a loan over 25 years. A comfortable difference a priori. Problem: the rate of 1.51% does not take into account the costs (guarantee, file…) and especially the insurance rate. However, the more your profile is risky – you practice a risky sport, you are a smoker, you are old… -, the higher the insurance rate.
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And in these cases, the gap between the overall credit rate and the rate of wear is quickly filled or even exceeded. This forces the bank to refuse the loan request. This scissor effect traps thousands of borrowers. “It’s a peak! This usury rate is supposed to protect borrowers and it backfires. It’s a bit the guardrail that goes crazy“, analyzes Olivier Lendrevie, president of Cafpi. All profiles are concerned, even the wealthiest.
Kitesurfing, smoking, too old
This is the case of a 48-year-old couple living in Strasbourg who wish to borrow 207,000 euros over 15 years. Although they earn more than 93,000 euros per year together and have a contribution of 40 years, their overall rate was 2.49%. Blame it on an insurance rate of 0.84%! The reason? These borrowers smoke. Same punishment for a young 36-year-old first-time buyer, living in Amiens and wanting to be loaned 210,000 euros over 25 years. Again, his salary is comfortable (32,000 euros per year) and his significant contribution (14,000 euros). But his insurance rate is 0.63%. His flaw? She practices kitesurfing, considered a risky sport. The fatal accident which claimed the life of a 31-year-old Parisian practicing this sport, after a sudden gust of wind in Villers-sur-Mer (Calvados), is there to prove it.
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Finally, a 51-year-old investor, living in Nantes, also exceeded the legal limit because of a high credit rate (1.6% over 15 years) and insurance (0.7%). The reason? His age. Result: its overall rate is 2.5% (against 2.4% for the maximum legal rate) for a loan of 130,000 euros over 15 years. And yet, she earns nearly 47,000 euros a year and had a contribution of 30,000 euros. Note that for these three examples, the borrowers used another bank for their insurance rate. Despite this, they are therefore high.
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Announcement from Bercy this week
Brokers are calling for an urgent reform of the method of calculating the wear rate so that it reflects the reality of the market. “The current formula induces a lag of 6 to 9 months compared to the rates actually practiced“laments Olivier Lendrevie. “We are asking for a wear rate of 3.5% and no longer 2.40% so as not to exclude young or older profiles, over 45 years old», declares Ludovic Huzieux, president of Artemis Courtage who also claims a «flat rate insurance of 0.4% for all or an exclusion of this insurance in the calculation of the credit rate“.
Bercy is workingwith the Banque de France, the French Banking Federation and consumer associations” to find a solution. An announcement will be madethis week“, confides the Ministry of the Economy to the Figaro. The situation is all the more urgent as, according to brokers, more and more banks are offering voluntarily high rates to be sure that the file does not go through. “In other words, they slow down or even stop the production of mortgage loans because it is no longer profitable for them.“Slips Maël Bernier, from Meilleurtaux.