Real estate credit. Is the revaluation of “wear rates” sufficient?

The State has just published the wear rates, applicable to the third quarter of 2022. What are they? And why do brokers deem the rise insufficient? Here are some answers.


What is the wear rate?

The maximum authorized lending rate. It protects borrowers,” writes the state. The bank does not have the right to offer you an APR (total effective rate) above this threshold. The APR refers to the overall cost of the loan: base rate, insurance, administration fees, etc.

Why are we talking about it again?

The state has just set the new usury rates. For a twenty-year mortgage, the threshold went from 2.40% to 2.57%. But brokers consider this increase insufficient. More than one file in five is refused because of the rate of attrition,” affirms Géraud Cambournac, the director of the Association of intermediaries in bancassurance.

How does the usury rate slow down credit?

Brokers point to its method of calculation. The Banque de France uses the average effective rates recorded in the previous quarter, and adds a third. This wear threshold then applies for a quarter. However, the rates are increasing month by month. The wear threshold, based on rates observed one or two months back, is found to be too low,observes Géraud Cambournac.This excludes credit for first-time buyers, seniors, etc.

Brokers suggest raising the rate, at least temporarily, to around 3% over twenty years. But Michel Mouillart, housing economist, delivers another analysis: The attrition rate mainly blocks the activity of brokers. To reduce part of the costs, the banks call on them less. For this expert, the problem comes rather from the requirements of the Banque de France in terms of personal contribution. Maël Bernier, of the broker Meilleurtaux, does not agree: Currently, we have average rates over twenty years at 1.80%. By adding only the insurance and the guarantee, we arrive at 2.84% for a loan of €200,000. It does not pass, even without bank charges or brokerage fees.

What does the Banque de France say?

We do not see any exclusion of borrowers, which would be associated with the rate of wear,says François Villeroy de Galhau, Governor of the Banque de France. Real estate financing is well assured.A banker nuances the picture: In order not to block files, we are cutting back on our margins. But that can’t last, given the rise in our own borrowing costs on the markets.