[Mise à jour du mercredi 28 septembre 2022 à 21h42] The wear rate, or the maximum legal APR at which credit institutions are authorized to offer loanswas automatically revalued on 1 October 2022. Until 31 December 2022, banks can therefore grant mortgages within the limit of 3.05% for mortgages over 20 yearscompared to 2.57% from 1 July 2022, and 3.03% for children under 20, against 2.60%. These are increments of 0.48 and 0.43 points respectively (more details below).
In its statement, the Banque de France, responsible for the quarterly calculation of the usury rate, mentions “a well-proportioned and more marked increase compared to last June. [qui] will solve some of the more difficult credit access situations encountered in recent weeks. “While several networks of mortgage brokers welcomed this reassessment when the new maximum rates were announced, credit professionals nonetheless tempered their enthusiasm, fearing the lull offer to borrowers would have been short-lived.
Because if its primary objective is to protect families from abusive borrowing rates, the usury rate, in a period of inflation like the one we are experiencing, has the effect of desolventing part of the demand. In fact, in early September, the The European Central Bank (ECB) has decided to raise its three key rates (the interest rate for the main refinancing operations, the marginal lending facility and the deposit facility) by 75 basis points due to inflation. Consequence of this decision: European banking institutions have to pay more to refinance themselves with the ECB. And also raise the interest rates on loans granted to households. In July, the ECB had already raised rates by 50 basis points.
We remind you that to calculate the usury rate, the Banque de France applies a calculation formula defined by law based on the rates charged by banking institutions during the previous three months. A race against time, therefore, which prompted brokers to ask for a reduction in lag for several months between the interest rates taken into account for the calculation of the usury rate and the current rates.
What is the wear rate?
The usury rate, also called the “usury threshold” is defined as the maximum annual percentage rate (APR) at which a loan can be granted to an individual by a credit institution. Any loan offered at a higher rate is considered a usurer. The usury rate is governed by article L314-6 of the Consumer Code. It is established by the state in order to protect borrowers from possible abuse by banks and credit institutions.
The usury rate depends on the type of loan, the amount and the duration of the loan. In particular, a distinction is made between consumer loans and real estate loans. For example, real estate loans and loans for works over € 75,000 are divided into five categories:
- Fixed rate loans with a duration of less than 10 years;
- Fixed rate loans with a duration between 10 years and less than 20 years;
- Fixed rate loans with a duration of over 20 years;
- Variable rate loans;
- Bridging Loans.
To calculate the usury rate for a given loan category, the Banque de France takes the average effective rate charged by lenders by a quarter and increases this rate by a third. The data obtained constitutes the usury rate for the following quarter.
What is the dropout rate in 2022?
For example, the average effective rate applied in the third quarter of 2022 by lenders for mortgages exceeding € 75,000 over a period between 10 and 20 years was 2.27%. As a result, the usury rate for these same loans in Q4 2022 is 3.03%.
|Average effective rate applied to
3rd quarter 2022
|Usury rate applicable on 1 October 2022|
|Fixed rate loans with a duration of less than 10 years||2.27%||3.03%|
|Fixed-rate loans with a duration of between 10 years and less than 20 years||2.27%||3.03%|
|Fixed rate loans with a duration of 20 years or more||2.29%||3.05%|
|Variable rate loans||2.19%||2.92%|
When is the wear rate updated?
The usury rate is published in the Official Gazette by the Banque de France at the end of each quarter for the following quarter. It is also displayed in the “Rates and Prices” section of the “Statistics” category Website of the Bank of France. The usury rate is detailed for all loan categories.
Who sets the usury rate?
The usury rate is set by the Banque de France, which is the central bank of France. Indeed, the Banque de France has monetary, financial and economic missions. Among the services to the economy, we find in particular the protection of families against over-indebtedness. Part of the Banque de France, the Supervisory and Prudential Resolution Authority (ACPR) controls the banking and insurance business.
In the eyes of lenders, some borrowers present a greater risk of default. This is the case of the elderly or some people who exercise a risky profession. The interest rate charged to them therefore exceeds the usury rate and the bank refuses to lend money. To avoid this overshoot and be eligible for a loan, you can play on the TAEA (effective annual insurance rate) by taking out less expensive borrower insurance in another establishment.
Penalties for exceeding the usury rate
Article L341-50 of the Consumer Code provides for penalties for credit institutions that exceed the usury rate. Usury is punished with a 2-year prison sentence and a fine of 300,000 euros. The conviction can be accompanied by other sanctions, such as the prohibition of exercising certain professional activities for a maximum period of 5 years.