The fall in interest rates on home loans has an impact on usury rates. Certain files are therefore found at the limit of the maximum legal rate.
Is the rate of usury limiting access to mortgage loans for the French? Yes, at least for a certain category of borrowers. As a reminder, credit institutions do not have the right to lend at a rate higher than the legal usury rate.
Low rates restrict wear rates
But how does the usury rate, supposed to protect borrowers from abusive rates, see its application stricto sensu preventing the granting of certain financing? The explanation of this phenomenon is to be sought on the side of the drop in rates and the method of calculating wear rates. Yes, because there are many usury rates in effect for mortgage loans and consumer loans. Within these two types of borrowing, the durations and the capital borrowed are each assigned a threshold.
The Good Finance thus issues, every quarter, around fifteen usury rates specific to each financing category. To do this, the banking regulatory body takes the temperature with the various banking establishments by listing the rates charged during the last three months.
The bank founded by Napoleon then draws up an average to which is added a one-third increase. The wear rates are therefore weighted on the rates practiced in France.
But in the context of falling rates
The wear limits also follow a downward trend (- 0.15% on average). For borrowers, this could be good news because the maximum practicable rate is falling. Their real estate financing cannot, therefore, exceed this limit which varies between 2.51 and 2.61% of APR.
This is where the rub is because the APR (annual effective annual rate) brings together all the costs linked to credit. In the context of real estate financing, administration fees and borrower insurance can lead the APR to exceed the authorized legal rate. This is a real problem because no bank will take the risk of granting a loan whose rate exceeds the usury threshold.
How to limit the risk of exceeding the wear rate
For some applicants, access to a mortgage can then be very complicated. This is especially the case for people who have overpriced loan insurance, for example, those with a health concern or who have already reached an advanced age. With a higher loan insurance rate, their APR can quickly increase.
To hope to get a loan to finance a property, the candidates at the limit of usury rates will have to modify their project somewhat. Either by lowering their claims with lower capital and a shorter loan term or by providing a larger personal contribution; either by adjusting the amount of their loan insurance. For example, a couple of borrowers who would like to cover themselves at 200% should revise their coverage at least to 100% by making the person bearing the insurance bear the least risk.
Likewise, optional guarantees such as the loss of employment guarantee or that concerning musculoskeletal disorders should be overlooked. But by dint of wanting to reduce loan insurance coverage or real estate financing, another risk presents itself: that of having a project that no longer corresponds to the initial wish and especially to their profiles. Borrowers will, therefore, have to decide.