Real estate credit: will it be easier to borrow after usury reform?


Since September, the usury rate, which sets the maximum rate at which banks are allowed to lend each quarter, has continued to fuel the debate about reducing access to mortgages. Its quarterly publication was considered responsible for the credit market freeze. Faced with the rapid rise in interest rates, the quarterly calculation of usury did not allow following the realities of the market.

To avoid closing the credit tap too much, the Bank of France will finally modify its doctrine by deciding to update the level of the wear rate every month. What to relaunch the credit machine in 2023?

The online broker Pretto has decided to measure the consequences of this measure. For Pretto, the monthly update should not change the interest rate hike much. Thus, it predicts a rise in 20-year rates to around 3.5% to 4% in the first half of 2023. A similar prediction to the one made in case the wear rate is kept published every quarter . “Rather than accelerating the rise in rates, this reform will smooth the rise each month,” believes Pierre Chapon, the co-founder of Pretto.

Also read – Home loan: the maximum rate for a 20-year loan will exceed 3.5% on January 1

But the monthly publication will allow the difference between the applied rates and usury to increase, gradually reducing the number of files blocked by usury. Pretto indicates that as of December 2022, 20% of files that can be funded in 2021 were no longer funded solely by the attrition rate. “From the second half of 2023, we believe that usury will cease to be a problem of access to credit,” says Pierre Chapon.

Debt, the main source of blockage

Good news at first glance, except that the attrition rate is far from the only reason that prevents individuals from financing their real estate project. “The increase in fees will lead to a massive increase in the eviction of files due to lack of sufficient budget”, warns Pierre Chapon. Thus, in 2023, the intermediary calculates that between 25 and 30% of the files that can be financed in 2021 will no longer be so due to the excess of the debt ratio, set at 35% of income of the borrower.

Blame it on rising rates, which make credit more expensive, along with prices falling too low. “Prices would have to drop by 20% in a year to avoid this phenomenon,” Judge Pierre Chapon. If the fall in prices at the national level seems to be confirmed, it should not, however, reach this level. According to Pretto, it will then be the youngest households and those with the lowest incomes who will be most affected, due to a lack of sufficient savings.

For Pierre Chapon, this would be an opportunity to review the debt rules determined by the Superior Council of Financial Stability: “These rules were established starting in 2020 to contain credit growth, driven by historically low rates. With the current upward trend, we believe that the definition of these rules could be revised. Therefore, we propose to increase the maximum debt ratio of 35 to 38% to finance properties with high energy quality or energy renovation works. » This measure would increase borrowing capacity by 8%.

Source : Le JDD

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