The wear rates, ie the legal maximums for the APR of bank credits, applicable to the 4th quarter of 2019 have been announced. They fall, again, for mortgage, and especially on the longest loan terms.
A 25-year real estate loan offer with an overall effective annual rate (APR) of 2.80%? Illegal, effective October 1, 2019! The wear rate applicable to the longest durations of the mortgage has been significantly revised downwards for the 4th quarter 2019: 2.77%, against 2.97% in the 3rd quarter. An important clarification, however: this wear threshold reports to the APR of the credit, and not the nominal bill often put forward by brokers or bankers. The APR takes into account the interests of the loan as well as the related costs (insurance, file, guarantee, etc.). The wear rates obviously only concern new loan offers.
Credit institutions are prohibited from exceeding
These are published quarterly in the Official Journal. They are calculated on the basis of the effective rates applied in these same establishments during the past quarter. In this case, for loans of 20 years and more, the average rate thus assessed by the Cream Bank was 2.08% in the 3rd quarter. This average is then increased by a third to fix the rate of wear.
These thresholds thus follow the curve of real estate rates, which break new records each month as they approach the floor. New illustration: even the wear threshold applicable to the loan relay, traditionally higher, fell below the symbolic bar of 3%! The consumer credit thresholds this time all follow the same downward curve.
Wear thresholds for mortgages
- Loans at a fixed rate of less than 10 years: wear threshold of 2.67% as of October 1, 2019 (compared to 2.72% in the 3rd quarter of 2019)
- Loans at 10 to 20 year fixed rate: 2.67% (versus 2.79%)
- Loans at a fixed rate of 20 years or more: 2.77% (compared to 2.97%)
- Relay loans: 2.99% (versus 3.16%)
Wear thresholds for consumer loans
- Loans of $ 3,000 or less: wear threshold of 21.04% in Q4 2019 (compared to 21.08% in Q3 2019)
- Loans between 3,000 and 6,000 dollars: 12.12% (compared to 12.49%)
- Loans in excess of $ 6,000: 5.75% (versus 5.92%)
More information on prevailing wear rates and the history of maximum mortgage rates