Yanis Darras // Photo credit: GARO / PHANIE / PHANIE VIA AFP 13:25 p.m., August 30, 2023

The rise in interest rates on mortgages is endless. For more than a year, borrowers have had to deal with increasingly expensive credit. And as of September 1, banks' usury rates will be raised. From now on, for loans of 10 years and more, the rate will be able to exceed 5%, unheard of for 15 years.

Will the French end up no longer being able to borrow? While the rise in interest rates continues, new rates of usury (the maximum rate that banks can charge when they grant a loan) have just been unveiled in the Official Journal. Thus, from September 1, the new usury rates will climb respectively to 4.23% for loans of less than 10 years, to 5.28% for loans between 10 and 20, and even to more than 5.56% for loans of 20 years and more.

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Rates as high as in 2008

These new rates of usury that banks must not exceed, therefore allow institutions to increase a little more the rates offered to customers. In just a few months, borrowing rates (excluding insurance) have risen from 2% on average in January 2023, to almost 5%. A rate that consumers or brokers had not seen for more than 15 years and which significantly reduces the borrowing capacity of buyers.

A production of real estate loans in free fall

An additional difficulty is that banks are asking for more and more guarantees, favouring large contributions. According to a study by Century 21, over the first half of the year, the average contribution now exceeds 89,000 euros and represents nearly 35% of the purchase price of the average property in France.

As a direct result of these sharp increases, the production of real estate loans is falling sharply. Thus, according to the latest statistics from the Bank of France published in July 2023, credit production collapsed to only 11.1 billion euros in June this year. This is almost half as much as at the same time in 2022.