Real estate credit: what the change in the calculation of the wear rate could change for you

On Friday January 20, 2023, the Minister of the Economy, Bruno Le Maire, announced that he would take “next week a decree allowing the entry into force of the monthly revision of wear rates from February 1, 2023”. This will notably concern real estate loans, consumer loans and loans to local authorities and associations. Explanations.

What is the wear rate?

The usury rate is the maximum overall effective rate (all inclusive: credit rate charged by the bank, any brokers’ commission, borrower insurance in the case of a home loan, etc.) to which banks can lend. They are not allowed to exceed this rate. The objective is thus to “protect borrowers, especially the most fragile, from an excessive debt burden”recalls Bercy.

Since it was introduced in 1966, the wear rate has only been revised at the start of each quarter by the Banque de France. It calculates it according to the 4/3 rule: the average rates charged by banks over the last three months increased by one third.

It was thus raised on January 1, 2023, notably from 3.05% to 3.57% for a mortgage over 20 years old.

Read also : Real estate. The wear rate increased to 3.57%: good or bad news for borrowers?

What changes from February 1?

From 1er February and until July 1, the Banque de France will update the wear rate every month, instead of every quarter. A change ” temporary “ to take into account “the phase of rising market rates”explains the Ministry of the Economy.

Because, for several months, interest rates have been rising in the wake of the key rates of the European Central Bank, and this, faster than the rate of wear. As a result, this restricts access to credit for certain categories of borrowers. While banks tend to “freeze” credit files at the end of the quarter to wait for the next increase in the usury rate.

The objective of this announcement is therefore to open the tap a little more.

Read also : Real estate loan. Will the rise in interest rates continue?

Who pushed for it?

The Banque de France was initially not in favor of it. But brokers, bankers and even notaries in mid-November alerted the authorities to the risks of a blockage in the real estate market.

“The wear rate aims to protect the consumer and that is very good, but it is based on a bad calculation by the Banque de France. The figures used are disconnected from the reality on the ground. For example, only the first month of the previous quarter is really taken into account, which accentuates the discrepancy”, recently entrusted to West France Bérangère Dubus, President of the Syndicate of Credit Intermediaries (UIC).

The Governor of the Banque de France defended himself in September in our columns: “The lenders who are demanding an additional increase in the usury rate are those who want to be able to lend more to the French. »

However, according to figures from the Crédit Logement/CSA Observatory published a few days ago, the production of mortgage loans would have fallen by 35% in the second half of 2022 (year-on-year), and even by 44% in the fourth quarter (compared to to the previous one). While the Banque de France for its part raised a mortgage market to a historic high in 2022 (excluding the year 2021), it also noted a slowdown – which it saw rather as the start of normalization – in the second half of the year. 2022.

What will happen now?

With the monthly update of the wear rate, “Banks will be able to price credit at its fair price, and therefore start lending again or lend more”, says Cécile Roquelaure, director of studies at Empruntis. But this “risk of contributing to the acceleration of the rise in credit rates”recognizes Julie Bachet, general manager of the Vousfinancer site, interviewed by theAFP.

In its forecasts, the Crédit Logement/CSA Observatory expects mortgage rates to rise in 2023 by around 120 basis points, with an average rate of 2.85%, until they reach the famous threshold of 3% in the fourth quarter (compared to 2.34% recorded in December 2022). Before returning to 2.2% on average at the end of 2024.

He notes that, in order to make up for part of the rise in rates, borrowers have continued to lengthen the duration of their credit, to 20.7 years (248 months) on average. She was only 13.6 years in 2001 (163 months). Today, 65% of home loan production concerns maturities of more than 20 years, compared to 20% in 2012. With, in parallel, a “dramatic increase” personal contributions. This penalizes the most modest to access the property.

#Real #estate #credit #change #calculation #wear #rate #change

Add Comment