The governor of the Banque de France, François Villeroy de Galhau, has dampened the hopes of banks and mortgage brokers, who have warned for months about the usurious interest rate, the calculation of which is unsuitable for the current rate rise, blocking a large number of borrower files.
The next review of the attrition rate on October 1st will be in “application of the existing rules, which will lead to a proportionate increase in this ceiling rate” from which the French can borrow, he declared on RTL on Friday, September 16.
The wear rate is calculated every quarter by the Banque de France on the basis of the average rate recorded in the previous quarter increased by one third. It corresponds to the maximum legal interest that banks can charge when granting a loan, including base interest, administration fees and any commissions, as well as the cost of borrower insurance and mandatory guarantees.
Negative effects on quantities
In the 3rd quarter, the interest rate was set at 2.57% for fixed-rate mortgages of 20 years and over. A level that is still too low to keep up with interest rate increases, according to the banks, which are suffering from pressure on their margins. They also see effects on credit volumes. According to a local banker, they fell by 45% in the French market last July.
Discussions were opened this summer between the banking profession and the Ministry of Economy. While Bruno Le Maire had proposed possible adjustments to the calculation of this rate, the governor of the Banque de France decided accordingly. There will be no question of temporarily deviating from the application of the mathematical formula as he has the power to do. François Villeroy de Galhau estimates that the mechanical increase in wear rates on October 1, as a result of the increase in rates last quarter, “will make it possible to settle the cases of more difficult access to mortgage loans than there have been in recent weeks“.