Erosion rate 2023: Everything you need to know

Erosion rate 2023: Everything you need to know


rate wear. The interest rate corresponds to the maximum rate at which banks can lend. Re-evaluated on January 1, 2023.

What is the wear rate? Definition of

wear rate indicates The maximum statutory interest rate that banks and other credit institutions are allowed to charge when granting a loan. They include the prime interest rate, fees and insurance premiums for the borrower. There is an abrasion rate for each of the different loan categories defined by the Bank of France (fixed-rate mortgages, variable-rate mortgages, cash loans, etc.). Fixed by the Bank of France by increasing the average effective rates charged by financial institutions by one third, the different interest rates are published in the Official Gazette at the end of each quarter and serve as a legal limit that cannot be exceeded. next quarter. Since January 1, 2023, new erosion rates have been applied according to the calculations made by the Bank of France regarding the statistics for the fourth quarter of 2023.

What is the decreasing rate for a home loan?

As explained above, there is not only one current abrasion rate, but several (one rate for each class of loans set by the Bank of France). Since January 1, new interest rates have been applied to mortgages and loans for work over €75,000.

Mortgage loans The attrition rate was applied on January 1, 2023
Fixed rate loans for a term of less than 10 years 3.41%
Fixed rate loans ranging from 10 years to less than 20 years 3.53%
Fixed rate loans for 20 years and more 3.57%
Variable rate loans 3.35%
Bridging loans 3.76%

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As an individual, it is possible to circumvent the erosion rate overrun by the lending institution By outsourcing insurance to the borrower (which is a significant part of the cost of a home loan) included in the credit offer. Facilitated by Lagarde’s law and now by Lemoine’s law, the fact of choosing to insure the borrower with a specialist insurance company, rather than a group contract offered by the bank, can make it possible to reduce the loan rate to a level below the wear rate.

Change in the number of monthly payments of the loan can sometimes result in a lower annual interest rate and thus the erosion rate can be circumvented. On the other hand, professionals are not entitled to circumvent the wear rate, at risk of two years’ imprisonment and a fine of 300,000 euros, according to Article L341-50 of the Consumer Code.

Loan denial and price erosion, how does it work?

Loan rejections associated with exceeding the wear rate are often encountered when applying for a mortgage. These refusals are particularly relevant to borrowers who, in the eyes of financial institutions, provide Payment risk (elderly people, someone with a serious medical history, etc.). When the lending institution calculates the total cost of credit for these people, the resulting APR can sometimes be higher than the erosion rate, and the loan offer cannot be legally sent to the applicant.

What is the amortization rate for a cash loan?

Here are the new interest rates applicable since January 1, 2023 for cash loans and business loans, with an amount less than or equal to €75,000.

cash loans The attrition rate was applied on January 1, 2023
Loans for an amount less than or equal to 3,000 euros 21.04%
Loans with an amount greater than 3,000 euros and less than or equal to 6,000 euros 10.55%
Loans over 6,000 euros 5.79%

What is the abrasion rate of a personal loan?

Loans for legal persons, without a commercial purpose The attrition rate was applied on January 1, 2023
Fixed rate loans for terms ranging from 2 years to less than 10 years 4.25%
Fixed rate loans ranging from 10 years to less than 20 years 4.24%
Fixed rate loans for 20 years and more 4.31%
Variable rate loans for an original term of more than two years 4.48%
Overdraft on the account 16.47%
Other loans with an initial term of less than or equal to two years 4.11%

What is the wear rate for a Professionals Loan?

Loans for natural persons, to meet their professional needs The attrition rate was applied on January 1, 2023
Overdraft on the account 16.47%

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