Since the beginning of 2023, faced with soaring real estate rates, Bercy has changed the pace of updating usury rates, these maximum rates which have blocked many borrower files. They are temporarily updated monthly. A measure which is extended, following the publication of a judgment in the Official Journal.
File blocked, absurd situation, I was told no, without explanation… These testimonies of households applying for a bank loan and disillusioned by almost immediate refusals date from last summer.
At the time, real estate rates were climbing very quickly, too quickly for the traditional formula for calculating usury thresholds – legal maximums at which banks are allowed to lend -, which swung credit files that were once easy in the pile of files the limit, or quite simply in the pile of refusals.
More responsive wear rates
After long negotiations with banks or other credit brokers, the Ministry of the Economy and the Banque de France accepted a temporary evolution: no longer update these limits quarterly but exceptionally on the 1st of each month.
A way to make this usury system, which is supposed to avoid over-indebtedness, more responsive to rapid market changes. Here are the usury rates valid from July 1, with the very symbolic bar of 5% crossed for the first time in more than 10 years.
Wear rate for real estate loans in July 2023
| Categories | Average effective rate practiced during previous three months June 1, 2023 | Wear rate applicable to June 1, 2023 |
|---|---|---|
| Real estate loans | ||
| Fixed rate mortgage loans | 3.08% | 4.11% |
| Fixed rate mortgage loans ≥ 10 years and | 3.63% | 4.84% |
| Fixed rate mortgage loans ≥ 20 years | 3.82% | 5.09% |
| Variable rate home loans | 3.52% | 4.69% |
| Bridging Loans | 3.78% | 5.04% |
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. Source: Legifrance.
Real estate credit: a wear rate at its highest for the first time in more than 10 years
The extension of this monthly update was announced in early June by the Minister of Housing Olivier Klein, but the formalization – by a regulatory text – was long overdue. It’s done, following the publication in Official newspaper of June 30, 2023 of a stopped increasing from 6 months to 12 months this period during which the rate of updating of wear rates evolves.
A monthly calculation until February 1
Very precisely, during this period of time, therefore until February 1, 2024the Minister in charge of the Economy publishes the Official newspaper of the French Republic of the average effective rates which have been applied during the 3 previous months as well as the corresponding wear and tear thresholds which will serve as a reference from the 1st day of the following month, to use the terms of the first judgment – dated 26 January 2023 – changing the wear rate update schedule.
These maximum rates are therefore always calculated on the basis of loans granted and tied during the previous 3 months. Simplifying, the Banque de France calculates the average, and adds a third of the value to obtain the maximum during the coming month.
In the longer term, a much more frank evolution of the method of calculating the rate of wear is claimed by real estate credit professionals. Pending a possible major change, this temporary monthly update measure has made it possible to avoid new mass blockages of mortgage files in 2023.
A wear and tear rate still on the rise, good or bad news for mortgages?