The maximum rate at which an individual can take out a loan will be revised. A major but temporary change that should be beneficial for borrowers. Explanations.
Is the sky about to clear on the mortgage front? While the average rate for a loan over 20 years continues to increase (2.52% in January) buoyed by the rate of 10-year OATs (the French government borrowing rate indicator, which serves as a benchmark for changes in the credit market in France, Ed), the future becomes clear.
According to consistent information from Capital and thingsthe usury rate, this all-inclusive rate above which a banking establishment cannot lend, will now be updated monthly from March 1st. This decision comes after a meeting between representatives of brokers, the Minister of Economy and Finance Bruno Le Maire, and Franois Villeroy de Galhau, Governor of the Banque de France.
Instead of making this increase once at the end of the quarter with a big market… we would do three smaller markets month by month, looking at the previous three months each time, summed up Franois Villeroy de Galhau before the Senate Finance Committee.
According to Le Figaro, the Minister of the Economy indicated that he had accepted the proposal for temporary monthly payment of the revision of the wear rate (…). in order to allow, in this period of rapid rise in rates, the attrition rate to adapt more quickly and more fluidly to changes in market rates. And the Minister to specify: This monthly payment will make it possible to maintain the objective of protection of the borrowers which has the rate of wear, while avoiding a situation where the rate of wear would become a factor of rationing of the supply of credit.
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A method of calculation that sticks more closely to reality
Brokers do not fail to welcome this decision, like Ccile Roquelaure, spokesperson for the broker Empruntis. Because the current blockages on the mortgage came above all from the rate of wear. Supposed to protect borrowers, it includes loan insurance, guarantees and administration fees. Fix 3.57% for loans of 20 years and over since January 1 (3.53% for loans between 10 and 20 years), the rate of wear was so far accused of blocking many borrowers, in particular because of too large a time lag in the method of calculation.
Indeed, for its calculation, the Banque de France normally bases itself on the average of the credit rates (taking the APR, the all-inclusive rate of the credit) of the last 3 months and plus a third to set the wear rate for the following quarter. The problem is that the rates taken by the Banque de France are those of the credits released by the banks at a given time, but negotiated months earlier by the borrowers.
For the wear rate in January, the Banque de France used an APR of 2.68%, which means that the nominal credit rate is around 1.85%. These are credit rates from August 2022. In September we were already 2% on averageexplained Mal Bernier, spokesman for the broker Meilleurtaux, for MoneyVox, before illustrating: Which means that the Banque de France was based on loans released in banks in October or November, but whose rates have t negotiated in August.
But this change in the method of calculating the rate should only be temporary. It would be an exceptional measure that could last one or two quarters, said a participant in Wednesday’s meeting, contacted Thursday by AFP.
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