Almost one in two mortgage applications have been rejected by banks in recent months, according to the French Association of Bancassurance Intermediaries (Afib). The reason: wear rates that are not high enough. The lower they are, the more complicated it is to borrow, especially in times of rising credit interest rates.
What are wear rates used for?
Usury rates are thresholds set by the Banque de France above which a banking institution is prohibited from lending money. The goal: to protect borrowers by prohibiting the granting of loans at excessive interest rates.
Determined at the end of each quarter for the following quarter, the calculation of interest rates takes into account the average effective interest rates applied by the banks in the previous quarter according to the duration of the loan (less than 10 years, 20 years and older) … ). Then they increase by a third.
A loan is said to be “usurious” (and will therefore be rejected by the bank) when it is granted at a total effective interest rate, or APR, that exceeds the applicable wear and tear. The latter includes the credit costs themselves and the costs of borrower insurance, application fees, etc.
More and more banks are posting credit interest rates above 2% over 20 and 25 years (excluding insurance), with a wear rate of 2.57% on 1.eh July 2022 (for the 3e quarter 2022) above these loan terms. Hence the current blockages…
A wear rate that “will usually be elevated” within a few days
The rules for calculating wear percentages do not change. However, according to the Banque de France, which received a delegation of brokers on September 20 about the difficulties in accessing mortgage loans, “given the data collected from the banks, interest rates will thus normally be raised on September 1eh October in a well-proportioned and more significant way than in June last year, by agreement with the Minister of Economy and Finance. »
This should make it possible to “resolve certain more difficult situations with access to credit that have been noted in recent weeks”, especially with regard to the oldest households, which have high borrower insurance rates.
Will this increase in wear rates be a game-changer?
The attrition rate should approach 3% at 1eh October. But in the opinion of some brokers, it will not change anything if the banks raise their credit rates. Interviewed by the magazine The ExpressIlan Rainier, associate director of the broker Vousfinancer, states in fact: “The banks are lending at 2%. If the usurious rate rises to 3% and they lend at 2.40%, it comes to the same”…