wear rate noted, what are the consequences?

– published on

There is something new in relation to mortgages: Since 1 October, it is possible to borrow a mortgage at a higher rate of wear. This increase, combined with the ability to more easily take out borrower’s insurance with an organization other than your bank, should allow many homebuyers to get their loans in the coming weeks.

Energy crisis, increase in the price of raw materials and other inflations has had a significant impact on the French budget. To the extent that many real estate projects have failedand with good reason: the increase in debtor interest rates combined with an attrition rate of 2.57% in the 3rd quarter constituted real brakes on mortgage loans.

But since October 1st and the increase in wear thresholds, from 2.57% to 3.05% for loans of 20 years and more, requests are granted more. As a reminder, this is maximum loan can be granted to. This rate, limited to protect borrowers, penalizes them to the extent that some are able to manage their finances well and therefore repay their mortgage.

Many brokers have decried the wear and tear, the limit of which was quickly reached when the costs of files and borrowers’ insurance were added to the calculation. This drastic increase in the annual percentage rate (APR) de facto blocked access to a mortgage loan. Professionals in the sector even presented a rejection rate of between… 10 and 50%!

In a statement Bank of Franceresponsible for calculating the attrition rate in each quarter refers to “a well-proportioned and more significant increase than last June [qui] will make it possible to resolve certain more difficult situations with access to credit that have been identified in recent weeks.”including the purchase of housing.

If the interest rate has increased, the debtor’s interest rates should not follow the same increase, at least in the very short term. Therefore, it is important for many loan applicants to fulfill their request and not to waste time, especially if they have signed a sales agreement. Indeed, this improvement in the mortgage sector should not last as mortgage rates should continue to rise over the course of next 6 months at least.

Outsource your borrower’s insurance to get your mortgage more easily

Thanks to Lemoine’s law adopted last February and published in Official Journal of the European Union on 1 March 2022 (“Law No. 2022-270 of 28 February 2022 for fairer, simpler and more transparent access to the borrower insurance market”) cancel your loaner’s insurance at any time.

You can thus quite well take out a mortgage loan from a bank without taking out insurance with them. By playing the competition and by initializing a cheaper contract in another company, you will be able to reduce the cost of the loan and, by extension, move away from the limit imposed by the wear rate.

Leave a Comment