French TAEG (Global Effective Annual Rate) Vs Usury Rate  

French TAEG? Usury Rate? Let’s understand what this is all about … 

The Usury Rate (ie. “Taux d’Usure” in French) was implemented to protect borrowers against excessive mortgage rates, which could potentially place them in a difficult financial situation.  

It is the French Ministry of Economy, Finance and Industry that calculates the rate. It is published quarterly by the Banque De France and varies according to the type of loan (personal loan, mortgage, overdraft, etc.), the amount borrowed and its duration. 

For the most common loans (Duration of 10 years and less than 20 years), the current usury rate is 3.03% (Q4 2022). 

When applying for a mortgage, the lender must calculate all the costs related to your financing and determine the Global Effective Annual Rate (i.e. TAEG =  “Taux Annuel Effectif Global” in French). For the mortgage to be approved, Its value must not exceed the value of the Usury Rate. 

The method of calculation of the TAEG is defined in the appendix to article R-313-1 of the Consumer Code. It is expressed as a percentage calculation according to the equivalence method with an accuracy of at least one decimal point.  

Costs included: 

• The mortgage interest rate (nominal rate)  
• The admin fees (Bank application fee + Brokerage commission)  
• The cost of the mortgage life insurance  
• The mortgage guarantee fees  
• All other costs imposed for obtaining the credit (Monthly bank account maintenance charge if you are asked to open a bank account for example).  

Costs not included :  

• The taxes on the transaction 
• The notarial deed fees  
• The real estate agency fees 

Source : private-rate.com

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