And if the euphoria of the real estate market was coming to an end? While prices and the number of transactions have reached record highs since the start of the Covid pandemic, borrowers now find themselves faced with an increasingly glaring problem: access to credit. Indeed, the average rates for borrowing are constantly rising: after falling below the symbolic floor of 1% in December (for 20-year loans) according to the Crédit Logement observatory, here they are flirting or even now exceeding the bar of 1.5%, many brokers report. The majority of them are also counting on an inevitable continuation of rate hikes, which could thus reach 2% or more by the end of 2022. The consequences are clear for buyers: the cost of credit will likely – and barring an unforeseeable reversal – to explode in the space of a year.
But above all, beyond costing more, mortgages are now quite simply… inaccessible to many households. Indeed, there is a Global Effective Annual Rate (TEAG), more commonly known as the wear rate, beyond which it is legally impossible to grant a line of credit. In the second quarter of 2022, this rate was set at 2.4% for home loans of 20 years and over. However, this maximum rate takes into account the cost of all-inclusive credit, that is to say that it includes borrower insurance, administrative fees or even brokerage fees. The accumulation of these costs, for the most fragile files, often becomes prohibitive to obtain a loan. This effectively excludes many borrowers from the credit market.
Société Générale and Crédit du Nord suspend part of the files
In this context, the average rates are so close to the usury rates and the margins expected by the banks are so low on these files that some now prefer… to limit the number of loans they grant. According to our information, this is how two establishments, Société Générale and Crédit du Nord, temporarily suspended the production of credit with brokers. Brokers who, according to the Professional Association of Credit Intermediaries (APIC), represented between 37% and 40% of files submitted by borrowers in 2021. “Société Générale continues to offer loans to its customers, examining their personal situation on a case-by-case basis”, confines itself to communicating the banking establishment. Société Générale and Crédit du Nord nevertheless refuse to confirm or deny having suspended the issuance of credit to brokers’ customers, despite our reminders. “I can confirm that these two banks have suspended the production of credit via brokers”, however insists a first professional in the sector. “Two major banking establishments have just decided not to accept any more files because of this regulatory obstacle”, explains a second player.
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Other banks, more mischievous, do not officially suspend the files… but offer such high rate grids that in practice, it becomes very difficult to borrow from them. “Some establishments have rate schedules at 2.10%: gold, at these levels, it becomes very difficult to conclude the files”, thus deciphers the representative of a major brokerage network. “The grids of the banks are now changing very quickly, and their offers are valid for a very short time: borrowers must sign very quickly if they obtain a loan”, now advises this broker to his clients.
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