The newly published usury rates are following the non-resident mortgage rates trend
The Banque de France just announced an increase in the usury rates applicable on October 1st.
These usury rates are intended to protect individuals from abusive borrowing conditions for different types of financing over several durations. It caps all the costs associated to your mortgage (mortgage rate, guarantee fee, brokers’ commission, mortgage life insurance, bank application fee).
It is now set at 3.05% for real estate mortgages over 20 years and 3.03% under 20 years.
According to the rate tables newly presented, French banks are now posting rates above 2.50% over all durations to finance the non-resident clientele.
If mortgage rates are increasing, it is because of the rising cost associated with the French debt over 10 years. Bonds assimilated to the Treasury (OAT), on which the banks base themselves to establish their rate schedules, reached 2.81% on September 29 2022. This is more than double the level observed on August 2 2022.
The European Central Bank (ECB) is also stepping in to counter inflation. The ECB raised its rate applied to refinancing operations by 0.75 points (from 0.5% to 1.25%). Credit institutions, banks and lenders are therefore faced with the increase in the cost of supplying liquidity… and pass it on to borrowers.
There are a few things that can be done to finance your project under the current usury rates.
- Look for a shorter mortgage duration. The shorter the duration, the lower the rate.
- Negotiate a lower bank application fee. This will lower the cost associated to your financing
- Externalize the mortgage life insurance. This is a very effective to lower the total cost of your file
Our dedicated team of brokers can help you to negotiate and implement better terms and conditions for your purchase in France.