While real estate loan rates have been falling since the start of 2024, the new usury rate published at the end of March increases further, to stand at 6.39% for loans over 20 years and over. An increase which raises questions about the usefulness of the wear rate, or at least about its real method of calculation.
Good news for borrowers: after having been the main source of blocking many real estate loan files between 2022 and 2023, the usury rate is no longer a question for borrowers today. As a reminder, this is the maximum all-inclusive rate (including the credit rate but also borrower insurance and possible credit costs, Editor’s note) above which a bank cannot lend.
An increase in the usury rate despite the drop in rates
Published March 27 for application on April 1, 2024, it now stands at 6.13% for loans between 10 and 20 years and 6.39% for loans of 20 years and over. Until now, it was set at 6.01% and 6.39% for these two loan categories.
Usury rate for real estate loans in April 2024
| Categories | Average effective rate practiced during the three months preceding April 1, 2024 | Wear rate applicable to April 1, 2024 |
|---|---|---|
| Real estate loans | ||
| Fixed rate real estate loans | 3.42% | 4.56% |
| Fixed rate real estate loans ≥ 10 years and | 4.6% | 6.13% |
| Fixed rate real estate loans ≥ 20 years | 4.79% | 6.39% |
| Variable rate real estate loans | 4.39% | 5.85% |
| Bridge loans | 5.07% | 6.76% |
This category also includes credit resulting from a consolidation including one or more real estate loans whose share exceeds 60% of the total amount of the consolidation operation. Source: Legifrance.
An increase that raises questions. After a monthly payment in 2023, the usury rate returned to its classic method of calculation, i.e. the average of the credit rates of the last three months, increased by a third. But surprise: as of April 1, the wear rate is again increasing compared to January. And this, while real estate loan rates have been falling since the start of the year, going from around 4.5% in mid-December to 4% on average at the start of April.
The usury rate (max APR) increases by another 6.39% over periods 20 and over while rates have fallen by more than 50 basis points in 4 months! When we think that this usury rate is supposed to prevent banks from raising rates too much… The illustration of its complete discrepancy and its total uselessness, breathes Mal Bernier, spokesperson for the broker Meilleurtaux. According to her, the rates used to establish this new rate of wear are those that we found for files processed in November 2023. A far cry from the first three months of 2024.
Real estate loan: who would benefit from a change in the method of calculating the usury rate?
At the end of December, the Banque de France estimated that the return to the quarterly calculation method should contribute to the trend towards the stabilization of real estate credit scales, and give better visibility to borrowers.
For Mal Bernier, the publication of these new usury rates has the opposite effect… and could even generate a perverse effect for borrowers: Today, banks are choosing to lower their rates. But in reality, the increase in wear rates could allow banking institutions to raise their standards while continuing to be able to lend. Difficult to see where the protection of the borrower is.