Bercy has resolved, according to our information, to accept a change in the method of calculating the rate of wear taking into account “of the exceptional circumstance of the rapid rise in interest rates in the market in recent weeks, and especially in recent days. As a reminder, the usury rate corresponds to the maximum legal rate that credit institutions are authorized to charge when they grant you a loan. This modification, authorized within the framework of the law, aims to better take into account the acceleration of the rise in interest rates, while preserving a fair balance between the protection of the borrower and access to credit. It will come into effect when calculating the new wear rate from July 1st.
The surge in interest rates will therefore have swept away the last reluctance to review the usury rate, a request made by credit professionals since mortgage rates reached their lowest point in June 2021 (average rate of 1 .05%, all durations combined).
Since then, rates have begun a slow rise, which accelerated sharply in April, then especially in recent weeks. According to the latest figures from the Crédit Logement Observatory, the average rate (excluding insurance) stood at 1.38% at the end of April, more or less its level in April 2019. This average rate even climbed to 1.49% over a period of 25 years.
Lag problem
It is not so much the absolute level of the mortgage rate that poses the problem – it is still well below inflation – as its rate of increase, which is much higher than anticipated. However, this rapid progression – the ten-year OAT rate, which serves as a benchmark for mortgage rates is now well anchored above the 2.30% threshold – undermines the mechanics of the interest rate. usury, set by law and revised quarterly by the Banque de France, to protect consumers against excess credit at abusive rates.
This attrition rate is in fact calculated, every three months, on the basis of the average of the rates observed on the loans made in the previous quarter, increased by one third. Unlike the rates used by Crédit Logement, the wear rate is expressed in APR (annual percentage rate), i.e. it also includes ancillary costs, such as borrower insurance (compulsory for the mortgage) or administration fees.
However, given the quarterly lag, the last of usury fell slightly on April 1 to settle for example at 2.40% for a loan of 20 years or more. That is barely ten basis points more than the ten-year OAT, even if the banks continue to refinance at zero rate with the European Central Bank, a rate which should however drop to 25 basis points in July . But banks must also bear the cost of risk, the cost of distribution and management fees.
zero margins
“Our margins are nil, even negative”, a banking source tells us. Already, some banks are taking their foot off production, and players who don’t have access to central bank refinancing or deposits, like some online banks, have stepped on the brakes squarely. In fact, through competition but also the ceiling imposed by the usury rate, banks cannot easily pass on the increase in the cost of refinancing to their credit pricing conditions.
In practice, low real estate rates that rise very quickly, and a wear rate, which also remains low, given the time lag specific to the calculation method, create a scissors effect, which begins to exclude certain households, first-time buyers or the most modest, from access to financing. Indeed, their file tangents or exceeds the 2.40% ceiling too easily, after taking into account all costs, including the commission charged by mortgage brokers.
Hence the need to review the device. However, there is no question of the “big night” of the wear rate, as some professionals ask with the idea, for example, of excluding borrower insurance from the calculation of the APR. It would imply for that a legislative modification, too risky for a relative majority. “If parliamentarians could impose a 0% mortgage, they would gladly do so! »jokes a banker.
Adjustment more political than technical
The choice was therefore made to modify the method of calculation, a possibility offered by law, in the event of “exceptional circumstances”. And the recent surge in interest rates, which no one really anticipated, can reasonably be considered an exceptional circumstance.
If the technical measures have not yet been decided, according to a source close to Bercy, the idea is to give more weight to the rates observed at the end of the previous quarter rather than at the start of the quarter. Especially since a rate observed at time t actually reflects a price scale fixed two or three months before, the time that the accepted file is actually released. It is, according to a banker, “to stick more to the reality of the rates”.
If on a technical level this reform of the calculation does not present major technical difficulties, the question remains delicate on a more political level. Even if the government has never really shown an immoderate love for real estate, it cannot afford a bad trial by excluding part of the French from home ownership (even if it is generally the banks that are accused of turning off the tap). Especially since in a period of inflation, ownership remains an effective means for households to secure the cost of housing in the years to come (and this is not the case for rents). And, unlike 2019, the labor market is quite good, which is strengthening household appetite for stone.
Conversely, Bercy does not want to show too high a rise in the rate of wear and tear, which risks sanctifying a period of high inflation for the months to come, and this in the midst of a debate on purchasing power. The modification of the method of calculation of the wear rate may well be presented as a simple technical measure: it will have resulted from a very political arbitration.
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