First decline in the usury rate for real estate loans since 2021

“The usury rate applicable to fixed-rate household mortgage loans of 20 years or more falls by 23 basis points. From July 1 and until September 1, the usury rate will be 6,16% against 6,39% for the second quarter", indicates the Banque de France in a press release.

This is the first decline since 2021 in the usury rate of this category of real estate loans, which represents more than two thirds of the production of new loans, and we have to go back to April 2017 to find a drop of the same magnitude, adds the text.

The average mortgage rate fell below 4% in the first quarter, to 3,99%, according to data from the CSA/Crédit Logement Observatory.

Usury rates are ceiling rates set by the central bank based on the rates charged by banks over the previous three months. They aim to protect the borrower against over-indebtedness.

This rate caps in particular all the costs of a real estate loan: credit rate practiced by the bank, possible brokers' commission, borrower insurance.

Calculated quarterly, the usury rates were updated monthly in 2023, with banks and brokers judging the previous system too slow to adapt to the rapid tightening of monetary policy.

The monthly calculation of usury rates, intended to support the increase in interest rates orchestrated by the European Central Bank (ECB), "allowed banks to better support the rise in rates and gave them more room for maneuver. wide to adjust their scales", the Banque de France indicated at the end of 2023, announcing the return to a quarterly calculation.

Illustrative image of the article via Depositphotos.com.