The usury rates were set on a monthly basis to adapt to the sharp rise in mortgage rates since last February 2023 but, starting January 1st 2024, they will again be revised quarterly.
As a reminder, the usury rates are the maximum global APR rate to which banks must finance individuals in France. All credit-related costs are integrated into the total cost of the mortgage to determine the global APR (called “Taux Annuel Effectif Global” or TAEG in French).
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).
Whether for real estate loans or consumer loans, the usury rates have been calculated each month to try to counter the very rapid increase in mortgage rates. By carrying out a more frequent revision, the Banque de France’s decision allowed French banks and lenders to adapt their rate scales more regularly to the monetary context in 2023.
Usury rates will have increased by 2.70 %, between January 2023 and January 2024 (from 3.57% to 6.29% for real estate mortgages with a duration of 20 years or more).
The Banque de France announced the end of the monthly review of the usury rates on Thursday December 28th 2023.
This exceptional measure is no longer necessary according to the French government as monetary conditions are stabilizing (The 10-year OAT remains below the 3% in January 2024), inflation is on the decline and for the second time since last October, the European Central Bank has left its index rates unchanged.
The year 2024 is starting on a positive trend as French lenders are determined to finance new real estate investors by repositioning themselves on the market and offering increasingly attractive mortgage rates. If certain banking establishments have already started to reduce their lending rates, a large number of them are doing so in a very measured manner.
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