Taux d'Usure: Why French Banks Reject Good Borrowers
Have you been denied a mortgage in France despite having good income? The culprit might be the 'Taux d'Usure'. Understand this legal cap.
Taux d'Usure: Why French Banks Reject Good Borrowers
Note: This content is specific to the French banking system.
In France, there is a strict legal limit on the interest rate a bank can charge: the Taux d'Usure (Usury Rate).
It is designed to protect consumers from predatory lending. However, in times of rising interest rates, it can have a nasty side effect: the "Scissors Effect".
The Mechanism
The Usury Rate is set by the Banque de France based on past average rates.
- Scenario: Market rates rise quickly (e.g., from 3% to 4%).
- Problem: The Usury Rate (calculated on past data) might still be at 4.5%.
- The Block: If your TAEG (Nominal Rate + Insurance + Fees) exceeds 4.5%, the bank is legally forbidden from lending to you.
Who gets blocked?
Ironically, older borrowers or those with health issues are hit hardest. Because their insurance premiums are higher, their total TAEG is higher, often pushing them above the Usury Rate ceiling.
Solution
If you are blocked by the Usury Rate, try to lower your TAEG by negotiating cheaper external loan insurance (Délégation d'assurance).
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