It is a publication awaited every quarter by players in the real estate loan market. Every three months, the Banque de France publishes the usury rates for loans in France. These percentages are ceiling rates beyond which banks are not allowed to lend. In order to adapt to the market and not prevent access to credit, the usury thresholds are updated according to the rates applied by lending organizations. A few weeks ago, the bicentennial institution published its latest figures for the 4th quarter of 2024, calculated from the average rate charged by banks in the 3rd quarter.
However, this new data aroused astonishment, since certain mortgage usury rates revealed anomalies compared to a classic rule applied when calculating a borrowing rate. This rule is very simple: in principle, the longer the duration of a loan, the higher the rate applied. A logical relationship, since the longer a loan lasts, the more the risk of not being repaid increases for the lender.
The usury rates for fixed rate loans published by the Banque de France are divided into three borrowing periods: loans with a duration of less than 10 years, loans with a duration between 10 years and less than 20 years and loans with a duration of 20 years or more. The usury rate for loans less than 10 years old in the 4th quarter is naturally the lowest (4.63%). On the other hand, loans with the longest duration of 20 years or more show a rate of 5.85%, or 0.18 points less than the rate for loans with a duration of between 10 and 20 years!
In other words, these credits are, on average, cheaper for longer durations. An anomaly which can be explained by the practices of the banks, the usury rates for the 4th quarter being, as we recall, calculated from the average effective rate practiced by credit organizations in the 3rd quarter. The Banque de France thus evaluates this rate for each loan duration, then adds a margin of one third to set the usury rate.
The cause of these astonishing numbers is not due to a data error. It is in fact linked to a trend in the real estate loan market. Currently, banks are seeking to attract first-time buyers. However, the latter are generally younger than the average borrower. They therefore borrow for longer periods, generally between 20 and 25 years. It is therefore precisely on this tranche of loans that banks have particularly lowered their rates in order to attract this clientele. A drop in rates which is also accompanied by lower insurance rates, due to the younger age of borrowers.
Obviously, these are only averages, as not all banks apply this commercial policy. Some establishments are in fact more selective and will tend to maintain higher rates for longer loans. However, this data must be taken into account by first-time buyers: it can constitute a strong argument when negotiating a long-term loan with banks.
