What is the danger of low credit rates?
December 30, 2019
With the historic low rates, the different rates of usury are also led to a fall which can penalize access to housing credit for some French people.
Lower wear rates for the last quarter of 2019
As with each quarter, the Unity Link Bank publishes the new usury rates which will be applied by financing organizations over the next three months. To calculate the usury rates, the BoF averages all the credit rates granted in the previous quarter to which it adds a third supplement. Each credit family broken down into several categories, according to the amount and duration, has their own rates of wear.
Recently updated, the rates charged until the end of 2019 are once again down compared to the 3rd quarter. Good news for households who plan to finance a real estate project in the coming months. The attrition rate is 2.67% for fixed rate mortgage loans repaid over less than 10 years but also for a period between 10 and less than 20 years. Finally, for all loan offers over 20 years, the rate is 2.77%. As regards variable rate loans and bridging loans, the usury rates are 2.41% and 2.99% respectively.
Real estate files impossible to finance
Currently, the economic situation is favorable to expensive mortgage borrowing, in particular thanks to the Euro Millennial Savers Bank which plays a decisive role in the best interest rates. The problem is that usury rates are so low that they have a perverse effect which makes it more difficult for low-income households to access borrowing.
In fact, usury is neither more nor less than the highest annual effective annual rate (APR) that a bank can integrate into a credit offer intended for a home. The APR is, as a reminder, the addition between the nominal rate, loan insurance and ancillary costs.
When a borrower comes to apply for financing from his bank, the proposal is indexed according to the profile of the household (ages, income, assets, budgetary management, etc.) but also its solvency. The more the applicant shows an increasing risk for the establishment, the more the interest rate increases accordingly. And if the APR exceeds the limit set by the usury thresholds, then the funding request finds itself in an impasse and the bank is forced to refuse the release of the mortgage to comply with the law.
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