This indicator, which corresponds to the maximum that a bank can lend, is at a historically low level, which reduces the ability of households to borrow. It will be the cause of 45% of loan denials since the beginning of the year, according to a survey published Tuesday.
It’s the new scarecrow for people looking to buy an apartment or house. The erosion rate, an indicator set by the Bank of France that corresponds to the maximum the bank can lend, will be responsible for rejecting nearly half of mortgages since the beginning of the year. More specifically, 45% of denials since January 1 can be explained by this rate, according to a survey conducted in particular by the French Association of Bancassurance Brokers (Afib), revealed by France Info on Tuesday. ‘It’s a worrying percentage’believes Jerome Cusano, president of AFIP, who is calling on public radio to take corrective action.
To understand why the wear rate poses a problem, it is necessary to look at the way it is calculated. It is determined by the Banque de France every quarter by taking the average rates applied by banks for the previous three months, then increasing them by a third. Since July 1, 2.57% are designated for mortgages of twenty years or more. This guarantee is supposed to protect families from rates of abuse: when negotiating a mortgage, the banker ensures that the actual annual rate (Taeg) of its borrower, i.e. the total cost of credit (the nominal rate offered by the bank but also insurance and guarantee costs, etc.) wear rate. The problem is that in the context of the rapid rise in interest rates, the method of calculating usury continues to take into account those who practiced the previous quarter… and sets a ceiling that no longer corresponds to market realities.
“It only creates injustice.”
“It’s kinda dangerous, warns Jerome Cusano. Our fear is that the entire real estate ecosystem, and all professions and employees, will be affected by this problem of wear and tear if we don’t address it quickly. The real estate specialist offers several solutions: modifying the method of calculating the rate of wear by increasing two-thirds instead of one, or even putting the borrower’s insurance permanently outside the Taeg account. I have ReleaseLast month, the head of broker Cafpi, Olivier Lindrey, also thought that borrower insurance should not be considered anymore. Its cost is completely separate from price movements. It just depends on your individual risk profile. It only creates inequality by excluding people from property because they are older or have health concerns,” was indignant.
According to the Opinion System survey, more than half of mortgage rejections related to erosion rate are for people between the ages of 30 and 55 (51%). These are mainly loans to purchase a major home (71%) that were rejected due to the wear rate. “Preventing people from remaining as tenants while rents are rising is a matter of purchasing power,” pointed to Release Pierre Chabon, co-founder of the brokerage firm Prito. It also calls for rapid measures, in particular a revision of the corrosion rate calculation method, to resolve this situation.