# Taux de l’usure and Mortgages



## rickjames8

Ok - I just spoke with our lender (Capfi) and heard that our once-solid application has now been denied. 

For some background, we spoke with this agent in April before we viewed our house, and then started the application process once our offer was accepted. It took until July 5th until we got our Compromis signed - which is when the real application process can begin. When the agent then made a formal application, it was denied because the resulting mortgage rate would be higher than the taux de l’usure (wear rate). It seems legit, but also a little odd. Here is how I understood his description:

At the end of each quarter, the national Bank of France sets these wear rates in order to protect borrowers from being over charged. No bank is allowed to lend money at a rate higher than this rate. But because the ECB has been raising rates so much this quarter, it's now nearly impossible for borrowers to secure a mortgage lower than the taux de l’usure. Our agent is still working on finding other options, and even said that he'd reduce or remove his fee if it would help secure a loan (the loan origination fees factor in to the rate compared to the wear rate), but he said at this point even removing his fees doesn't get us under this threshold. 

We're in a unique position that we could actually buy the house outright. Thus, we made our offer non-conditional on a loan, mostly because there was a competing offer from another buyer that was also not conditional on a loan, and we needed to add that clause or lose the house. Now, if we buy the house outright, it will deplete most of our savings. We asked about buying outright and then later getting a mortgage later this year if/when things normalize. Our agent said that is just not done in France. 

So, the journey continues. I'll keep this thread updated with how things turn out. In the meantime, if anyone is working with a lender who has figured out how to navigate this, I'm happy to hear any insights. 









Crédits : à quoi sert le taux de l'usure ?


Le taux de l’usure correspond au taux maximum légal que les établissements de crédit sont autorisés à pratiquer lorsqu’ils vous accordent un prêt. Fixé à la fin de chaque trimestre pour le trimestre suivant par la Banque de France, le taux de l'usure vise à vous protéger d’éventuels abus. Tour...




www-economie-gouv-fr.translate.goog


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## BackinFrance

It hasn't been easy to get a mortgage in France since late last year and it is now all but impossible. Could you not take out a mortgage in the US against your US home? I don't like your chances of getting one here unless you are wealthy or have other real estate here that could be put on the line to secure your application. US interest rates may be higher but perhaps this is a case of needs must.


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## rickjames8

No, we sold the home in the USA. That is how we have the funds to purchase this house.


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## EuroTrash

rickjames8 said:


> the taux de l’usure (wear rate)


Perhaps "usury rate" rather than "wear rate".








What Does Usury Rate Mean?


The term usury rate refers to a rate of interest that is considered to be excessive as compared to prevailing market interest rates.




www.investopedia.com





although I think the way the concept is applied is a little different in France from in anglo saxon countries..


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## BackinFrance

Le taux d’usure


On entend régulièrement parler du taux d’usure en matière de crédits, y compris de prêts immobiliers. Mais qu’est-ce que le taux de l’usure ? à quoi sert-il et comment est-il calculé ? Faisons le point sur ce qu’il faut savoir.




particuliers.banque-france.fr




.

The above explains how it works in France and various options for getting around it such as other lenders and/or insurers, though you may not be successful in doing so. In that case if you have other savings you could try using part of that to reduce the amount you need to borrow, but then you need to ensure you still have sufficient income to service the loan. If you are holding savings back in order to renovate or make changes to suit your personal tastes, you could consider deferring at least some of those works where they are not really necessary.


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## BackinFrance

EuroTrash said:


> Perhaps "usury rate" rather than "wear rate".
> 
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> 
> 
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> What Does Usury Rate Mean?
> 
> 
> The term usury rate refers to a rate of interest that is considered to be excessive as compared to prevailing market interest rates.
> 
> 
> 
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> www.investopedia.com
> 
> 
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> 
> although I think the way the concept is applied is a little different in France from in anglo saxon countries..


It is definitely not wear rate.


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## rickjames8

BackinFrance said:


> Le taux d’usure
> 
> 
> On entend régulièrement parler du taux d’usure en matière de crédits, y compris de prêts immobiliers. Mais qu’est-ce que le taux de l’usure ? à quoi sert-il et comment est-il calculé ? Faisons le point sur ce qu’il faut savoir.
> 
> 
> 
> 
> particuliers.banque-france.fr
> 
> 
> 
> 
> .
> 
> The above explains how it works in France and various options for getting around it such as other lenders and/or insurers,


Thanks for the link! I'd like to check with other borrowers, but searching threads here, I only see people recommending Capfi (who we're working with already). Do you know of another? I've heard people recommend asking your own bank, which we did, but HSBC is not doing new mortgages in France at this time. 



> if you have other savings you could try using part of that to reduce the amount you need to borrow


We wanted to do this. Our current plan was to finance 80% of the house. We offered to finanace only 50% of the house, but our agent didn't think it would improve our chances. But we'd take anything if it was better than financing 0% of the house. 



> If you are holding savings back in order to renovate or make changes to suit your personal tastes, you could consider deferring at least some of those works where they are not really necessary.


Well, we had a lot of plans for that money, and yes, a good chunk of it was to go to fixing up the house. However, I like to do the work myself, which makes getting home improvement loans difficult. And sure, without a mortgage payment, we should be able to do some work with the income. 

btw, I was using Google Translate where they translated this term as 'wear rate'.


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## suein56

rickjames8 said:


> btw, I was using Google Translate where they translated this term as 'wear rate'.


It's the borrowing rate .. the legal maximum interest rate Banks etc are allowed to use when they grant you a loan/mortgage.
*Le taux d’usure : qu’est-ce que c’est ? *
Le taux d’usure correspond au taux d’intérêt maximum légal que les établissements de crédit sont autorisés à pratiquer lorsqu’ils vous accordent un prêt.


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## Bevdeforges

rickjames8 said:


> I've heard people recommend asking your own bank, which we did, but HSBC is not doing new mortgages in France at this time.


HSBC is also in the process of doing a major reorganization of its various national banks and banking services.

You may want to approach a French bank on this - though you may wind up having to agree to switch your banking to them as a part of the deal. Just remember that a French lender (bank or whatever) cannot make you a loan if the repayments are more than one-third of your regular income.


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## BackinFrance

Just a further comment on the Taux d'usure. It only became compulsory for financial institutions in France on 1 January this year and the fine for not complying is €300,000. The rate is updated on the first day of each quarter based on data from the previous quarter.


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## BackinFrance

Another courtier you could try is Pretto. And you can do so online. They are one of the biggest


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## yonderblue

@rickjames8 Curious what happened here, as we are in a similar situation. Any details you don't mind sharing?


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