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bad news, 20-year wear rates drop on April 1

The wear rates in effect for the second quarter of 2022 have just been published in the Official Journal. And they are down from last quarter for loans over 20 years and over. What make a little more complicated access for some households to mortgage.

Rising mortgage rates and falling wear rates: the news is not necessarily good for households wishing to borrow over the long term. Published in Official newspaper from March 28, the attrition rates that apply from April 1 for the second quarter of the year are indeed slightly down on the previous quarter. While mortgage rates are rising, this could create a penalizing scissor effect for some households, according to the broker Vousfinancer.

As a reminder, the usury rates are set every 3 months by the Banque de France and designate the maximum rate beyond which a bank is not entitled to lend. They are calculated by increasing by one third the average annual percentage rate (APR) applied by the banks during the previous quarter.

More difficult loans

As of April 1, 2022, usury rates are rising on short terms (from 2.4% to 2.43% for loans between 10 and 20 years). On the other hand, the wear rate for loans over 20 years and over continues to fall and has reached 2.40%. A decrease of 0.01% compared to the first quarter of 2022 (2.41%), but of 20 points compared to the same period a year ago (2.60% in the second quarter of 2021).

Usury thresholds for home loans

  • Fixed rate loans of less than 10 years: usury threshold of 2.51% from April 1, 2022 (compared to 2.44% in the first quarter of 2022)
  • 10 to 20 year fixed rate loans: 2.43% (vs. 2.4%)
  • Fixed rate loans of 20 years and over: 2.40% (compared to 2.41% for T12022)
  • Floating rate loans: 2.32% (against 2.33%)
  • Relay loans: 2.87% (compared to 2.88 at T12022)

Wear thresholds for consumer loans

  • Loans of 3,000 euros or less: usury threshold of 21.11% on April 1, 2022 (compared to 21.17% in the first quarter of 2022)
  • Loans of an amount between 3000 and 6000 euros: 9.85% (against 9.8%)
  • Loans over 6,000 euros: 4.93% (stable compared to T12022)

The rise in credit rates combined with the drop in usury rates therefore risks, at least for the next three months, making it more difficult for some households to access mortgages, worries Vousfinancer

The credit broker gives this example: a couple with 45000euros income per year who wishes to borrow 200,000 euros over 20 years with a 10% down payment will see their loan application refused. Indeed, with a rate offered in a large national bank of 1.95% over 20 years, plus an insurance rate of 0.30% (on initial capital, 50% on each head), the APR will be 2.70 %. Either a rate higher than the current wear rate, 2.40%. However, the debt ratio of this couple is only 28%, well below the maximum of 35%.

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Wear rates are currently totally out of touch with reality of the market, judge Sandrine Allonier, director of studies for Vousfinancer, in a press release. As proof, over 20 years and more, the most common credit durations, the wear rate has fallen by 20 points in one year, even though credit rates have increased by 15 points. In April 2021, we borrowed on average 1.25% against 1.40% currently, with a rate of wear that is currently lower. It is therefore understandable that today many borrowers are in fact excluded from credit.

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