The interest rate, the maximum rate at which a bank can lend to an individual, is now 2.57% for loans of 20 years and more. While mortgage rates are rising, many files are caught in a scissor effect that endangers their projects. Four borrowers told MoneyVox about their struggles in the face of a fee “supposed to protect borrowers,” but which is increasingly punitive.
“I can miss the property I want, and I don’t know how long I will have to wait after, and what the taxes will be then. I, even with an immo rate at 3%, I don’t care, I just want the credit to go to me. Like many other French, Guillaume is now at an impasse, blocked by the rate of usury that prevents him from obtaining a mortgage.
To recall, the usury rate is the maximum legal rate above which banks are not allowed to lend. Thus, a mortgage (including the nominal rate, insurance or various administrative expenses) do not owe today more than a rate of 2.57% for loans of 20 years and more or 2.60% for loans of less than 20 years.
The problem: is the method of calculating the usury rate, reviewed every quarter, taking the average of the rates of the previous quarter increased by a third. It is now out of step with the rapid rise in mortgage rates. At 2.40% on April 1, the attrition rate gained +0.17% on July 1. At the same time, the average credit rates over 20 years it fell from 1.45% in April to 1.85% in July, according to broker Meilleurtaux. By adding mutual insurance, bank charges and any brokerage fees, the equation becomes more complicated.
“I was told no, no explanation”
For Guillaume, who wants to buy a property to be closer to his son and to be able to obtain joint custody, everything started well: “I found a property that I liked, then I went to see my bank, the Caisse Savings . rewinds this 38-year-old man, who works at Afnor, a certification body. Everything went well, I mounted my file which was validated from the bail agency. Everything went through the bank but at the last minute, when I checked in at headquarters, I was told no, without explanation. »
It is a cold shower, especially since with almost 50% personal contribution for a property at 200,000 euros, his file seems largely fundable. “During the simulations, my maximum debt ratio was 21%, swears Guillaume. The first rate they gave me was 1.65%. Maybe the time to do the checks, the rates had increased and they could no longer take this proposal? In the meantime, I saw a broker who told me that the current rates of the Caisse d’Epargne were closer to 2.10%.”
Home loan: credit rates at 2%, what the upcoming decision of the ECB has in store for you
Then he tried to approach several banks: LCL, BNP Paribas, CIC… I was offered rates at 2.25%, without insurance! I also asked Boursorama, with whom I also have an account. They told me straight up that they couldn’t do anything because their rates were already too high compared to the usury rate. “Last hope for Guillaume, Crédit Agricole: “I was told that maybe we can do something, but it is my last resort. The situation is complicated and the longer the file drags on, the more the fees will increase. »
Refusal of delegation of insurance
If she will be able to realize her project, Sylvie measures how lucky she was, after having several disappointments. “Currently a tenant, I am thinking of buying a house, explains the one who will be withdrawn from Airbus on November 1. When I found the property I wanted, I went to La Banque Postale, my bank of life. We built the case, but at last he was refused on the pretext that I was above the rate of friction, and that he did not have enough to live on. But after paying off the loan, I still had 2600 euros left! I didn’t even go over the debt ratio, I was at 19%! »
So she uses a broker. But here again, between the credit rate and the insurance rate, the contacted banks responded in the negative, due to an exceeded usury rate. In front of the banks, Sylvie tries to get around the problem, presenting delegations of insurance, with equal equivalents but less expensive, to go under the rate. “What really surprised me was this banks refuse delegation of insurance. I had found two insurances at lower prices but that met the criteria. However, the latter did not want to take the delegations that I proposed. »
A situation that annoys Sylvie a lot: “When you’ve had a client for years trying to get a loan, like my case at La Banque Postale, we can try to set up another one!” I had 35,000 euros down, and the loan was around 111,400 euros. I could have put more but that was not the problem, La Banque Postale absolutely wanted me to claim their insurance. »
Save up to 70% on your loan insurance
Finally, he decided to contact Crédit Mutuel, the bank of his employer, Airbus: “They did everything to pass my file, ensuring that the insurance costs me as little as possible. My credit rate is 1.45 % and the amount of insurance on my 15 year loan is about 7000 euros. As I will be retired on November 1st, We will only keep the death insurance which will lower the cost as well. I was really very lucky to find this solution, it is a great relief for me. »
A surcharge can be very expensive
Patrice was less fortunate. Having worked in Switzerland for 25 years, he wants to return to France for his retirement in a few months. So he decides to build a house on the land he bought with his savings. After obtaining a building permit and obtaining various quotes from craftsmen, he contacted Crédit Agricole, which offered him a loan of 220,000 euros at the nominal rate of 1.09% over 15 years in April 2022.
But the bank also wants Patrice to take out his insurance at the bank establishment. Problem: after a coronary operation in early 2020, he finds himself paying a high premium. “After this insurance problem, I found myself to pay 2.5 times more insurance premium than interest repayment (about 38,900 euros in borrower insurance premiums and 16,900 in interest repayment). As a result, my APR is at 3.16%, much higher than the currently authorized 2.60%. As a result, I find myself with a plot of land on which I cannot build anything. »
Despite attempts with different insurance companies and a debt ratio of 25% on this project, Patrice is therefore blocked by the rate of wear due to his medical record. His solution now: finance the project himself, without going through the bank: “The problem is this.” I will only have money available when I retire, in a few months, and that this funding will have to be made to withdraw substantial capital from my pension fund, which will have the effect of considerably reducing the retirement pension I will receive. »
Home loan: who benefits from a change in the method of calculating the interest rate?
Testimonies far from reassuring John*. Tenant for a long time, this man of just under fifty plans to buy real estate soon: “Our owner wants to sell, so I started to explore, even if we have to wait for the end of the trial period . my wife, who has changed jobs,” he explains. He always made an appointment with the Cafpi broker a few weeks ago to find out about his loan capacity and the different steps to be taken Here again, the speech is far from encouraging: June, we were offered at best an APR for our project of 2.60% when the usage rate was 2.40%. Today, even if the usury rate has gone up a bit, credit rates are also on the rise! »
With a contribution of 10% for a loan of around 300,000 euros, the first simulations show a debt ratio of around 20%. Holder of an account at La Banque Postale, started the discussions: “La Banque Postale offered us a rate of 1.90% over 23 years, while saying that things were changing so quickly that within 15 days, this rate no longer applied. And this is not counting the loan insurance. In the end, we have already slightly exceeded the wear rate in the simulation. All these factors bring us to a point of attack. In the end, the situation is really absurd: this interest rate should protect the borrower, but it turns against us. We have not yet embarked on our real estate project, but all the signals are already red. »
* The name has been changed
Home loan: find the best rate