Real estate credit: the usury rate continues its inexorable rise

2023-10-01 14:37:14

The usury rate increases from 5.56% to 5.80% this October 1 for property loans taken out by households over 20 years or more. It goes from 5.28% to 5.55% for loans over at least ten years but less than 20 years. It was still at 3.57% in January. In short, this means that obtaining credit is more accessible but also that it is more expensive.

The objective of this rate is to protect households from abusive practices since it corresponds to the maximum ceiling to which a bank is authorized to lend. If the overall effective annual rate (the APR, which includes the gross rate, mandatory guarantees, insurance and additional costs such as any broker’s commission) is higher than the usury rate, the bank does not have the right to grant credit. To calculate it, the Banque de France takes the average of the rates charged by a sample of 10% of bank agencies over the previous three months, then increases it by a third.

A wear rate recalculated every month

Since February 1, 2023, the usury rate is no longer revised every quarter but every month to follow the increase in interest rates which are included in its calculation. On July 1, he crossed the symbolic bar of 5%. A record since 2014. Depending on the type of loan, there is not one, but several usury rates. This rate applies to real estate loans, consumer loans, account overdrafts, or revolving loans, etc. But with the rapid rise in interest rates, more and more home loans exceed this usury rate and banks are therefore unable to grant credit.

Because if the usury rate does not increase, interest rates can no longer increase either and banks may be reluctant to lend money in a context of monetary policy to fight against inflation. More precisely, interest rates are increasing due to the monetary tightening carried out by the European Central Bank (ECB) since the summer of 2022, which has increased the cost of banks’ resources and therefore the level of credit rates they offer to customers. The risk is therefore to block access to the real estate market.

According to an Opinion System survey published in August 2022, before the monthly calculation, 45% of credits were refused because of the usury rate. Young first-time buyers were the most affected because the interest rates applied to their files are generally higher. The monthly payment of usury rates therefore made it possible to raise interest rates more quickly and to streamline the processing of current files.