Mortgage credit faces growing obstacles

Mortgage credit is encountering challenges as rising interest rates and the usury threshold are blocking some borrowers from getting approved for loans. These factors are making it harder for individuals to secure financing for real estate purchases.

Interest rates are on the rise

According to Artemis courtage, average mortgage interest rates for 20-year loans were 3.65% and for 25-year loans were 3.75% at the beginning of October. These increases are raising the overall cost of real estate projects and making loans more expensive for borrowers.

Usury threshold limits borrowing

A "scissors effect" is preventing some borrowers from realizing their purchase projects due to the usury threshold, which sets a legal ceiling on household debt. This limit, set by the Bank of France every quarter, restricts how much borrowers can owe relative to their income.

Banks offer lower rates to attract customers

As of October 1, 2026, the new usury rates are 4.68% for loans from ten to twenty years and 5.40% for longer terms. These relatively low rates are due to promotions by banks to attract new customers, such as Société Générale offering a canonical rate of 3.20% for long-term loans.

Total annual effective rate can exceed limits

Despite these promotions, the costs of mortgage loans are significant. The 10-year OAT was already at 4.8% at the beginning of October. With a usury rate of 5.4% for longer-term loans, the risk of rejected loans is evident because the total annual effective rate (TAEG), which includes insurance and other fees, can exceed the usury rate.

Short-term mortgages are especially affected

Borrowers affected by this exclusion risk include those taking out short-term mortgages, as the usury rate for loans from ten to twenty years is only 4.68%. This affects individuals in their fifties who want to repay quickly, as their higher insurance costs can push the TAEG over the limit.

Age increases financial risk

Age is an aggravating factor, as older borrowers face higher insurance costs, increasing the TAEG. For example, a 60-year-old borrower wanting to borrow 150,000 euros over ten years might have a TAEG of 4.87%, exceeding the usury threshold and risking loan rejection.

Alternative insurance could help

Astrid Cousin from the broker Magnolia suggests that alternative insurance options can be up to four times cheaper than bank offers, with equivalent guarantees. However, banks remain reluctant to accept insurance delegation at the time of signing the loan.

ECB rate hike may worsen the situation

If the European Central Bank raises rates on October 26, it may become even more difficult to borrow until the end of the year, adding further pressure on mortgage applicants and lenders alike.