Brokers claim that today 45% of files are refused because of too low wear rates. “This figure is very unlikely (…) I deny it”, declared on BFM Business François Villeroy de Galhau. Who is wrong, who is right?
Are usury rates locking up the market or not? On the one hand, brokers claim that 45% of files no longer pass. Blame it on the rise in nominal bank rates, which are now around 1.85% on average over 20 years. Et al’vice that they form, more and more tight, with the rate of wear. The latter is the maximum rate, set and updated by the Banque de France every quarter, at which banking establishments have the right to lend. It is now at 2.57% for periods of 20 years or more and takes into account ancillary costs as well as insurance for the future loan.
A strangulation that François Villeroy de Galhau does not notice. “The real estate loan remains very dynamic, we are at more than 6% growth,” he said on BFM Business. “The rates are gradually rising. In July, we were on average at 1.45% (…) The rates remain very favorable and the mortgage remains very well financed”. And he added concerning the refusal rates: “This figure is not very credible (…). I deny the figure of 40 or 45% refusal”.
Where then is the reality? First of all, it must be understood that the brokers and the governor of the Banque de France do not have the same temporality. When the governor talks about a growth of 6% or a rate of 1.45%, he is talking about the credits that have actually been signed. So negotiated two or three months before. More specifically, as pointed out by latest press release published in early September by the Banque de France on the subject, outstanding housing loans (in other words all loans still to be repaid by households, which were taken out in recent months or several years ago) increased by 6.4% in July over one year (and 6.3% over one year in August). But the amount of new housing loans is down sharply, to 20.6 billion euros last August against 23.8 billion euros in August 2021, according to initial estimates. That is a decrease of 13.4% over one year.
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Moreover, the figure of 1.45% on average for loans corresponds to the TESE (effective rate in the narrow sense). However, the limit of the wear rate does not refer to this rate but to the TEG (global effective rate), also called APR (annual effective global rate). And in its press release, the Banque de France itself specifies that by “adding 60 basis points (0.60 percentage point, editor’s note) average value corresponding to the transition from the TESE to the TEG, the average rate remains very signifcantly lower than the rate of wear”. In other words, the TEG in July (according to the Banque de France) is already in reality around 2.05%.
The Housing Credit Observatory/CSA, which acts as a reference in the sector, estimates for its part that the average rate of new loans (excluding fees and insurance) was 1.82% in August. But again, these are the rates of credits actually released, not current market rates.
The brokers, on the other hand, talk about the offers at the moment T. “The average rates are still increasing at 1.5% over 15 years, 1.75% over 20 years and 1.90% over 25 years, but more more banks are now posting rates above 2% over 20 and 25 years”, notes the broker Vousfinancer for the month of September. And it is still necessary to add the rates of the borrower’s insurance as well as the expenses of file not to exceed the rate of wear.
Credit files filtered upstream
Then, the Governor of the Banque de France notes the applications actually refused. The files which have been studied by a bank and which after analysis have been refused. But today, many files do not even pass this stage. The banks refuse them before analysis, only because on simulation the APR exceeds the wear rate. These files refused even before analysis are not counted. If the Governor of the Banque de France does not see them, the brokers see them.
Sandrine Allonier, who takes care of the communication of Vousfinancer, specifies for BFM Immo: “The files are filtered at different levels, which explains why at the end of the chain, the networks of real estate agencies like L’Adresse do not only 20% of compromises were broken this summer because of a loan refusal.First of all, there is self-censorship and the wait-and-see attitude of potential borrowers who postpone their project for fear of not being able to borrow. Then the filtering of the broker: in certain agencies 70% of the simulations during the 1st meeting do not pass the wear and tear… therefore the files are not presented or not in the state Then, the refusal of the banks to take or to study files because superior to usury or not in their criteria.And finally, the effective refusal of the banks but the file can then be presented a 2nd time if they ask for more contribution for example, or with another editing, or reviewable… And all of a sudden will still lead to an agreement, but François V Illeroy de Galhau would not have known that it could have been a refusal without the effort of the broker or the banker, an effort that not everyone makes. This is why the notion of refusal rate is different according to the actors, and the number of filters that have been applied to the file before its arrival on the banker’s desk.
And this refusal to study the files by the banks is a real problem. Not only will the individual not get his loan, but he will not have his official refusal letter either. However, very often, in sales agreements there is a clause which obliges the buyer to obtain several letters of refusal if he does not have a loan, otherwise he will pay a percentage of the sale price (often around 10%).