Home Loans: Households Are Overwhelmed

Home Loans: Households Are Overwhelmed

And while rates are rising, usury, which corresponds to the maximum that a bank can lend, is at a historically low level. Because of this unprecedented context, many aspiring landlords are deprived of mortgages.

At 50, Natalie hoped to finally become an owner. With a net income of 3000 euros, this employee with a child alone can aspire to. As of the summer of 2021, it began excavating and entering into negotiations with an individual home builder. At the same time, his bank guarantees him that his project will be financeable with a loan. In April, everything was tied up., This Fifty-Things Remember Oise. But she still has to sign the land sale agreement. The case continued and the building permit was not finally accepted until June. Elsewhere in the meantime, Mortgage Rates forecast higher ECB rates, and a return well above the token bar of 1%. Natalie was finally denied her loan on July 13.

‘market glitch’

It happened a few months ago.The mother who saw her dream house collapse sighs “small garden”. The mortgage broker explained to him that his file had been frozen Because of the rate of wear. The latter corresponds to the maximum rate at which the bank is allowed to lend. The Bank of France calculates it every quarter by determining the average rates applied by the banks for the previous three months, and then increasing it by a third. Since July 1, 2.57% are designated for mortgages of twenty years or more.

But this guarantee, which is supposed to protect families from abuse rates, has turned against each other in recent months. When negotiating a home loan, the banker ensures that the annual percentage rate (APR) of his borrower i.e. in all credit costs (the nominal rate offered by the bank but also insurance and guarantee costs, etc.) does not exceed the wear rate. In the context of the low rates in force for years, these cases were extremely rare. But while the banks raise their rates, the method of calculating the erosion still takes into account that which was practiced three months ago and is in the doldrums. Thus, the margin for acceptance of files is reduced.

In a study published in early July, brokerage Brito estimated that 60,000 loans were bankable in 2021, but no longer existed in the context of the June 2022 market. “It’s a dysfunction in the real estate market, families have simply been left out”Co-founder Pierre Chabon. The phenomenon has gained momentum in recent weeks, according to Xavier*, an independent broker near Lyon. “Many bankers have told me they won’t take my hopes up anymore. Some have even stopped handing out mortgages completely.”He says.

“cold shower”

Brokers become persona non grata at the bank desk? Société Genérale no longer accepts their files “Temporarily” but “It will continue to provide credit to its clients, examining their situation on a case-by-case basis”. By Crédit Agricole, this is acknowledged “Some banks are rejecting brokers because they want more flexibility with the rate of depreciation.”. Working without brokerage fees in calculating the APR is really a good way to not get past the wear and tear.

If he does not judge “Not outrageous due to inflationary context» That the banks are raising their credit rates to nearly 2%, the head of the broker Cafpi, Olivier Lindrey, believes that it is the borrower’s insurance that should be excluded from the annual interest rate. Its cost is completely separate from price movements. It just depends on your individual risk profile. It only creates inequality by excluding people from property because they are older or have health concerns,” He is indignant.

For Christelle who lives in Eason, “There was a cold shower”. The 46-year-old nanny and her husband wanted to invest in a house for 300,000 euros. The case should have been handled smoothly with their combined salary as well as their contributions of €190,000 thanks to the sale of their previous apartment. However, the broker makes it clear to them that the file will not pass due to the current situation. “On the contrary, he showed us that young people who presented a similar image would have had an easier time getting credit,” Says.

For Pierre Chabon de Brito, it is necessary to review the method of calculating wear. “Avoiding people to remain as tenants while rents are rising is a problem of purchasing power”. Even the banks say they are in favor of updating the usury rate more quickly. Consumer associations are consulted by the government about this and can influence it. However, UFC Que Choisir says it has not received ‘Too few reports’. So this phenomenon will not be large in size. Unless it is its complexity that prevents affected borrowers from appealing…

*Names changed

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