Wear rate: up to 5.5%, what a difference


Wear rate: up to 5.5%, what a difference

WEAR RATE. An increase in the wear rate was recorded from September 1, 2023. Here are the consequences.

The wear rate was once again raised by the Banque de France. From September 1, 2023, banks will now be able to offer a mortgage for 20 years or more at a maximum rate of 5.56%. This ceiling has continued to increase for several months and is also increasing on all other types of credit that banking establishments can grant. The main effect of this decision is to make the cost of credit higher for borrowers and, therefore, to reduce their borrowing capacity. Above all, while the gradual increase in the usury rate was intended to broaden access to credit - banks protecting themselves more with the increase in interest - this does not seem, at this stage, to bear fruit since the number of credits granted is constant, even decreasing.

The rate of wear is the maximum legal rate at which a credit can be contracted. Above all, it allows you to protect a borrower against excessive rates that may be offered to him by various credit institutions. In other words, it makes it possible to avoid situations of serious over-indebtedness for an individual, and on a larger scale, the destabilization of the global economy. It therefore plays a regulatory role. It applies to home loans, consumer loans, account overdrafts, or revolving loans.

It is the Banque de France which sets the rate of wear. It is based on the average effective rates applied by credit institutions increased by one third. The thresholds vary according to the amount borrowed, the duration of the loan and the category of loan chosen (consumer credit or revolving credit for example).