Loi Lemoine: The New Difficulty in Mortgage Credit?

Loi Lemoine: The New Difficulty in Mortgage Credit?

Home Loan: It becomes difficult to get credit without support

After long weeks of deliberation and a law was finally passed on February 28, a Lemoine’s Law Sees the light of day in a few months on June 1, 2022. While this guidance is still only about new loan insurance contracts, all borrowers will be concerned by September 1, 2022. Insured! But is the truth formed when mortgage professionals actually notice a spike in loan insurance rates?

Lemoine Law Measures on Borrower Insurance

The claim of Lemoine’s Law is simple: to balance the forces at the heart of loan insurance, for more fair, transparent and easy insurance. The year 2022 therefore indicates potential for borrowers Termination of the loan insurance contract at any time and free of chargeProvided that the equivalency of guarantees is respected. The policyholder regains power by giving himself the possibility to break out of the insurance companies’ monopoly on banks, which own more than 85% of the market, to Introduce competition into effect through insurance authorization. The vast majority of this news has been greeted with relief by policyholders and industry professionals!

added to this Delete the medical questionnaire. The latter, aimed at estimating the risks arising from each insured profile, turns out to be a great punishment for sick or elderly people, as well as elderly people in poor health, because it justifies the exorbitant prices on the part of insurance companies. Now, this form disappears if:

  • The total amount of the loan is less than 200,000 euros per insured;
  • The term of the contract runs before the insured’s 60th birthday;
  • The project is related to the purchase or implementation of a business in a main or secondary residence, or simply the acquisition of a rental investment.

And for a good measure, the Lemoine law also enforces Reducing the right to be forgotten 10 to 5 years for all previous patients with cancer or hepatitis C, and you plan to expand this convenient regimen to other diseases.

Lemoine law ignites loan insurance rates

All the reassuring measures championed by the Lemoine Act promise good tidings for the future of borrower insurance. But what are these developments really, and what will be the response of insurance companies to such directives?

It appears that just a week after the Lemoine Act came into effect (on new contracts), it was already possible to provide the first elements of a response. In fact, insurance market reports a Price increase from 15% to 40% From one insurance company to another, or average increase of 25% ! But why such a reaction on the part of companies?

In addition to termination at any time to secure the loan, it is the removal of the medical questionnaire that appears to be the source of such a price fire. For insurers, they charge that the deadline is too short (three months) to bring their schedules up to standard and justify this inflation with a somewhat rough estimate of the risk that the health survey can no longer “predict” for criteria-observing loans from exclusion from this model. Insurance companies work blindly and charge exorbitant rates in case of an impossible risk.

For Representative Patricia Lemoine, this is a phenomenon that goes against logic, since all the administrative and medical costs incurred by the implementation of this health questionnaire are no longer taken into account when calculating the borrower’s insurance. However, for credit professionals, this is clearly a way of mitigating blind risk, or amplifying the total credit, in order to exceed this €200,000 limit per insured. To obtain a health questionnaire.

in the context of where Real estate prices soaringAlthough contained, it has a significant impact on borrowers’ access to real estate, the sudden rise in insurance rates reinforces this trend. We recall that Conditions for granting credit are closely regulatedNot allowing banks to grant loans on files that exceed 25 years of borrowing or 35% of the indebtedness, including insurance! Some insurance companies have even stopped offerings to adjust their rates.

In the end, it is the borrowers who want to obtain financing of more than 200,000 euros (per borrower) who benefit from a more personalized insurance offer at a “fair” price thanks to the medical questionnaire.

Hope mandate insurance and competition between insurance companies

If the first observation of the consequences of the Lemoine Act does not bode well for the insured, the medical questionnaire is not the only point covered by this ordinance. First, it is about allowing borrowers to terminate their insurance contract at any time and for free. A measure aimed at reversing the direction of the insurance market to prevent bank insurance guardianship and In favor of insurance authorization. Credit professionals and Representative Patricia Lemoine see it as a solution to fend off insurance price hikes, which then would only be temporary.

In the face of the dynamic of competition between insurance companies, the trend will shift to the company that offers the best offer. By the end of the year, it may be possible to see the situation stabilize and a return to appropriate rates. Moreover, insurance companies did not wait to monitor the development of the phenomenon to arm themselves with the best coverage offers …

Lemoine’s Law: A Law in Continuous Evolution

However, Lemoine’s Law did not say his last word! It is important to remember that the law did not enter into force until the 1st of June. The situation has plenty of time to change several times after changes in an uncertain context, between rising geopolitical tensions and international inflation. Thus the law can be adapted to Correct any malfunctions. In addition, the state specified that the law could be the subject of new decisions that interfere with the ceiling of the insurance share and the age of the insured.

In addition, the borrower’s insurance is already promising to improve during the summer of 2022. On July 31, a meeting will be held during which diseases will be accepted by AERAS Agreement It will be expanded, especially for diabetics.

Thus, new developments can still see the light of day in order to stem any bad repercussions of the Lemoine Act on the borrower’s insurance…

on the same topic

The Lemoine Law is still up for debate

The Lemoine Law is still up for debate

Despite the positive developments proposed by the Lemoine Act regarding loan insurance, debate remains open about the true impact of this decree on the mortgage loan environment. How will insurance companies adapt to meet these new restrictions?

read more

Wear rate, gear tuned for credit

Wear rate, gear tuned for credit

The usury rate, a specific interest rate that banks cannot exceed, limits access to mortgages for many borrowers. How do we explain this phenomenon? We will explain everything to you!

read more

Broker Basic Support

Broker Basic Support

Getting a mortgage is becoming progressively more complicated. Between credit restrictions, price hikes and changes in the borrower’s insurance, the services of an expert broker become essential.

read more

Cyberpret has become in 10 years:

+ More than 12,000 families

+ More than 12,000 families

It was funded and became
friends

+ 2.5 billion euros

+ 2.5 billion euros

Loan is open

Thousands of testimonials

Thousands of testimonials

Delivered who knows how to convince
Real estate agents and sellers




CNIL

Cookies: At CyberPrêt, respecting your privacy is not optional.

We use cookies exclusively for audience measurement purposes in order to improve our services. It will in no way be transferred to third parties or reused for commercial purposes. For more information about our cookie policy, click here!

CyberPrêt.com is a banking broker registered with ORIAS with number 13002284. Headquarters: 37 rue de la République 69002 LYON – RCS 433194230




Leave a Comment

Your email address will not be published. Required fields are marked *