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The Credit Foncier announced, on Friday, January 18th, that it was going to take " special measurements " for 150 000 of his customers having borrowed from variable rate and of which some are put in trouble by the violent increase in rates of interest.

Variable rates of loans approved to the individuals are reviewed every year from the evolution of the interbank rate Euribor. Between December, 2004 and December, 2007, it rises from 2,17 % to 4,83 %, before falling again lightly, at the beginning of this year 2008, to 4,44 %.

This violent increase put in trouble certain borrowers who had not been warned enough against the complex mechanisms of these loans. "The Credit Foncier approves a special effort, considering financial crisis, to reassure the property plans of our customers ", declared to the AFP, François Blancard, his managing director, who estimates his expenses in 35 million Euros." This measure spreads to all borrowers with variable rate, that they are or not touched by the crisis, in respect of a principle of nondiscrimination ", he specified.

DECEIT COMPLAIN

For the 60 000 customers having signed a regulated loan, of social accession or registered, the rate of interest will be culminated in 5,75 %, if it is indexed to Euribor, and in 6,25 % if its reference is the Treasury bill with fixed rate and annual interests (BTAN). For the 90 000 other customers who have signed a classic loan, the rate of interest won’t exceed 6 %, if it is indexed to Euribor, and 6,5 %, on BTAN. «The increase in their expiry dates will not be able to exceed the inflation and the capital remaining owed will never be able to be superior to the initial capital ", said Mr Blancard. Measurements will be retrospective from the first review since August 1st, 2007 and the customers will continue to benefit from future falls of rate, once the past crisis.

These measurements will manage to satisfy the collective «Action of the customers deceived by le Credit Foncier ". The foundation UFC-Que choisir, which defends the 349 borrowers having joined this collective, lodged a complaint, on Thursday, January 17th, to the prosecutor of Paris for deceit.

So, Mrs Laurence signed a 103 900€ loan with a rate of 3,45 % in November, 2006, to the Credit Foncier, through the social Credit of the civil workers which, decided to release a 1 million euro fund to help his clients in trouble. And this customer thought that the variation in the increase in its rate could not exceed 1,40. It was actually about a discounted rate, valid the first year only. A year later, rate was 6 %, so monthly installment was subjected to an increase of 27 %, (from 515€ to 654€), and the length of the loan stretched out from twenty four to thirty six years! Her case will be barely ameliorated by announced measurements.

Don’t forget to ask your mortgage broker all explanations about the variable rate:

• how long is it valid for?
• what is the cap and above all what would be the real Euribor rate taking into today’s account ?
  

In addition, make sure your monthly repayment (calculated by your broker or the bank) has been calculated with today’s Euribor and not with the discounted rate!

Bertrand Le Mire | Date Published : 2008-02-12 18:41:50 | Last modification time : 2008-02-12 19:03:47