The upward trend in June continued after months marked by rate hikes in April and May. This current situation is a burden on both banks with severely reduced margins and borrowers whose files are higher than the usury rate.
According to Vousfinancer, real estate loan broker, credit rates increased between 0.10 and 0.40% in June. The average rate increase since 2022 has been 0.50%. However, some banks have reached 0.75%. This represents an increase in monthly payments of EUR70 for loans of EUR200,000. EUR for 20 years.
Similar estimate for Pretto, the mortgage broker. This evokes an increase in the rate of 0.10% in June as well as an average increase by 0.60% over the previous year.
The average rates for Vousfinancer in June were 1.35% over 15 year, 1.55% over twenty years, and 1.75% over the last 25 years. The broker notes that banks are posting rates higher than 2% over the past 20 years. These rates have not been seen since 2017. With a clean file, you can always borrow at 1% for 15 years, 1.15% for 20 years, and 1.30% for 25 years.
The average Pretto rates are 1.46% for 15 years, 1.60 over 20 years, and 1.72 over 25 years. The rates for the most desirable profiles are offered at 1.29%, 1.54%, and 1.42% over twenty years.
The Banque de France has established a usury rate, which is the minimum amount that an institution cannot lend money. If a loan is granted at an APR or overall effective rate (includes the cost of credit, borrower insurance, administration fees etc.), it is considered “usurious”. It exceeds, at the time of its grant, more than a third the average effective rate that banks have applied in the preceding quarter (depending on how long the loan is).
This out-of-step method of calculation poses a problem. Since April 1, the current usury rates have been calculated based on the rates granted in January, Feb, and March 2022. This means that for credit requests made at the end 2021, you can still borrow with a good profile, at less than 1% over twenty years. The rate rises that have occurred recently or very slowly has not been considered.
Wear rates do not reflect the market reality in a period of rising rates such as the one we are experiencing. The wear rate, which is the most common credit term, has dropped by 20 points in a year (from 2.60% to 2.50%) despite the fact that credit rates have increased by 35 points (…).. According to Julie Bachet (general manager at Vousfinancer), it is understandable that many borrowers are not eligible for credit today.
Not just those with the most severe health problems or older age. She notes that people who were able to borrow without any problems six months ago are now unable to do so.