Real estate credit: 4 questions on the rate of wear, which can pose a problem in period

Average rates real estate loans increase month by month since December 2021. However, the wear threshold is calculated quarterly. What to block certain files. We explain the mechanism to you.

1. What is the wear rate?

This is the maximum rate a bank can charge for a loan. For a twenty-year mortgage, for example, this rate is 2.40%. The bank therefore does not have the right to offer you an APR (Annual Effective Annual Rate) above this threshold. Remember that the APR refers to the overall cost of the loan. It includes the base rate, fees, borrower insurance etc.

2. Why are we talking about it again?

Because in times of soaring inflation and interest rates, wear and tear thresholds can pose a problem. Certainly they are intendedto protect the borrower against excessive rates that would be offered to him, writes the state. Interest rates that are too high could put the borrower in a difficult financial situation.But in the current context, they can also limit access to credit for households, particularly modest ones”, observes Michel Mouillart, economist, housing specialist.

3. How can the rate of wear turn against the borrower?

To understand, we must remember how it is calculated. The Banque de France uses the average effective rates recorded in the previous quarter and adds a third. This wear threshold then applies for a quarter. However, the rates are currently increasing from month to month,observes Maël Bernier, spokesperson for the broker Meilleurtaux. The wear threshold based on a rate observed three months previously may therefore be too low. By adding insurance and fees, it no longer works.

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4. What to do?

Unfortunately, the only solution is to borrow less or increase one’s contribution. But low-income households have little contribution,” notes Michel Mouillart. It is also possible to bring competition into play in terms of insurance,advises Maël Bernier. Identical guarantees can give rise to a cost varying from simple to triple. Please note that from June 1, it will be possible to change at any time and free of charge. borrower insurance for new loan offers. And from September 1, this will also be possible for current contracts. Today, changing borrower insurance is only authorized on the anniversary date of the contract.

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