The wear rate will exceed 3%, a breath of fresh air for the real estate market

Baptiste Morin with AFP, edited by Laura Laplaud 12:47 p.m., September 29, 2022

Good news if you want to borrow.

In a context of high inflation and rising rates, the Banque de France has decided to raise the maximum legal mortgage rate, also known as the usury rate, to more than 3% for a loan of 20 years or more.

Intended to protect individuals from abusive borrowing conditions, this rate caps all the costs of a home loan: credit rate charged by the bank, any brokers' commission and borrower insurance.

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Attrition rate goes from 2.57% to 3.05%

The rate of wear, the maximum rate at which a loan can be granted, is set by the Banque de France.

The rate is calculated each quarter by the Banque de France, which takes into account the average rates charged by banks over the last three months, increased by one third.

There are as many wear rates as there are types of credits.

However, over the past three months, interest rates have increased, but the rate of wear and tear has remained the same.

Consequently, between the interest rates, application fees and insurance, one out of two files could be refused.

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The increase from 2.57% to 3.05% for a loan over 20 years or more is a breath of fresh air for the real estate market.

But Sophie Ho Thong, of broker Finance Conseil, warns that this is only temporary.

"It works with the grids. We will actually be able to support more projects, but we already know that the rates will continue to rise and that at some point they risk getting stuck again," she says.

In the immediate future, brokers plead for a faster updating of the wear rate every month, for example.

As for a possible drop in interest rates, it will not be before next summer, according to forecasts.