Real estate credit: towards a threshold effect at 200,000 euros because of loan insurance?

In February, parliamentarians approved the possibility for borrowers to terminate their loan insurance at any time, and no longer only during the first year or on the anniversary date of the contract. To counterbalance this measure of liberalization, the Senate and the National Assembly have also agreed on the abolition of the medical questionnaire from June 1 for loans of less than 200,000 euros and customers under 60 years old. These lower thresholds make half of the borrowers eligible for the measure.

Completed when the loan is signed, the medical questionnaire is above all a protection for the insurer. It allows him to be warned of the existence of a serious illness in his client, the latter having the obligation to declare his cancer, his sclerosis or his obesity. The disappearance of this formality, which will benefit 137,000 sick people according to the broker Reassure me – is therefore bad news for banks and insurers. They will have to insure the same risk, while controlling it less.

Price increases could therefore appear for all borrowers exempt from the medical questionnaire. “Some insurers have told us about a 25% increase for loans under 200,000 euros confirms Astrid Cousin, spokesperson for insurance broker Magnolia. The increases will depend on the composition of each insurer’s customer portfolio. Those well positioned on first-time buyers (more numerous to borrow sums below 200,000 euros, editor’s note) will be the most penalized. Conversely, those capturing a wealthier clientele with large loans will be less so.” The insurer Metlife, one of the major players in loan insurance, is for example on the front line on this issue, which specializes in covering risk profiles.

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Some professionals therefore fear the establishment of a threshold effect, encouraging borrowers to go beyond the established ceiling. “With the implementation of the loan insurance reform, we can anticipate large price differences between “blind” insurance below 200,000 euros and that “at the price of risk” beyond. We should have a lot of subscriptions at 201,000 euros”, fears Cyrille Chartier-Kastler, founder of the consulting firm Facts & Figures. And the latter to advise, paradoxically, borrowers in good health to subscribe quickly – before June 1 – a contract of more than 200,000 euros to be able to pass the medical questionnaire and obtain the best rates. He also predicts a 20% increase in prices for contracts below this ceiling. If the property were to cost less than 200,000 euros, a solution could consist in adding a credit envelope dedicated to the energy renovation of the property.

Increase your insurance quotes

Households who cannot take on more debt – binding standards oblige – or those who do not wish to do so will therefore have to suffer price increases. Unless they activate another lever: the loan insurance quotas. In the case of a couple, banks are often flexible in this area, agreeing to insure each borrower half, or 50% on each head. In the event of the death or disability of one of the two borrowers, half of the loan is thus covered by the insurance. In other words, in the case of a loan of 300,000 euros, everyone is insured on 150,000 euros.

“To circumvent future increases, one of the solutions consists in increasing its quotas, to go to 75% or even 100% for each of the co-borrowers” ​​explains Astrid Cousin. Admittedly, the cost of insurance will be higher, but nothing says that this additional cost is higher than that induced by the abolition of the medical questionnaire. And by the way, the borrower will be better covered…

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