Wear rate 2022: brokers received by the Banque de France
Tuesday, September 20, a hundred mortgage brokers demonstrated in front of the Banque de France to demand a significant increase in usury rates. Access to credit and by extension to property unfortunately risks remaining blocked, the institution having no intention of changing one iota to the calculation method in place since 2016. Angry brokers After weeks, even months, of questioning in the media, and of an online petition, the brokers used drastic means this Tuesday, September 20 by demonstrating in front of the Banque de France (BdF). The reason for this unprecedented mobilization? The 2022 wear rate, this maximum legal rate that commercial banks must not exceed when granting a mortgage. Introduced to avoid any possible abusive practice by the lender, the usury rate has been a blocking factor for months and responsible, according to intermediaries, for a very large number of refusals of financing. Brokers have been advancing a refusal rate of 45% since August and among some professionals, failed files represent 70% of their requests. Figures disputed by the BdF which affirms that the real estate market remains dynamic despite the rise in borrowing rates since last March, amplified by the new increase in September 2022. The delegation, led by the Union of credit intermediaries (UIC) , asked the BdF for an “exceptional increase in wear and tear on October 1”, a wish that will not be granted. François Villeroy de Galhau, the governor of the BdF, recalled that the role of the BdF was to calculate usury on the basis of legal provisions to protect borrowers, and that there was no contempt or denial of the profession, as some actors have recently denounced. Attrition rate in Q4 2022: an insufficient revision In a press release published after this event, the BdF recalls that “the attrition rate will normally be raised on October 1, in a well-proportioned and more marked way than in last June, in agreement with the Minister of Economy and Finance”. The institution says that this increase will “address some of the most difficult situations of access to credit identified in recent weeks”. The calculation method is in question, because it generates too great a lag between the time when wear and tear is set by the BdF and market interest rates. Faced with the very clear rise in the latter, the stagnation of wear and tear for a long quarter has led to a scissor effect for a good number of borrowing candidates. How to justify to solvent households who dream of accessing the property that the mortgage remains cheap, but inaccessible? This mainly concerns the over 55s, profiles penalized by the cost of home loan insurance, but also young first-time buyers, prevented by the granting rules which reinforce the requirement of personal contribution by two imposed limits: the debt ratio is capped at 35% of net income; the repayment period is limited to 25 years (up to 27 years in the event of acquisition in the new or in the old with major work). The expected increase in the usury rate on October 1 is likely to perpetuate the problem and block some transactions. For the record, the rate of wear is the TAEG not to be exceeded over the period concerned. For loans repaid over 20 years or more, the usury rate is currently 2.57%. With a nominal rate of 2% over 20 years, the equation is very complicated to integrate all the costs related to obtaining credit, starting with loan insurance, the second cost after loan interest. Whatever the margin allowed by the new legal rates in the last quarter of 2022, the delegation of borrower insurance remains the only effective lever to remain under wear and obtain financing for your real estate project.