The average rate for real estate loans fell below the 4% mark in the first quarter, to 3.99%, according to data from the CSA/Crédit Logement Observatory.
The Banque de France announced on Friday the first decline since 2021 in the usury rate for 20-year real estate loans, reflecting the decline in rates charged by banks over the last three months. “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% compared to 6.39% for the second quarter.indicates the Bank of 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, the text adds. The average rate of real estate loans fell back below the 4% mark 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 applied by banks over the previous three months. They aim to protect the borrower against over-indebtedness. In particular, this rate caps all the costs of a property loan: credit rate applied by the bank, possible broker commission, borrower insurance. Calculated every quarter, the usury rates were updated every month in 2023, as banks and brokers considered the previous system too slow to adapt to the rapid tightening of monetary policy.
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The monthly calculation of usury rates, intended to accompany the increase in interest rates orchestrated by the European Central Bank (ECB), “allowed banks to better support the rise in rates and gave them greater room for maneuver to adjust their scales”the Banque de France indicated at the end of 2023, announcing the return to a quarterly calculation.
