Domiciliation de Revenu will be Limited to 10 years from January 1
The law in France that requires borrowers to have their main account with their mortgage lender for the duration of the loan – the domiciliation de revenu – is to be watered down from January 1 in the interest of consumers.
The domiciliation de revenu is a French law stipulating that borrowers must domicile their income (revenu) with their mortgage lender until the loan is paid off in full. France’s new Economy Minister, Bruno Le Maire, is the man behind new legislation that will limit this to 10 years. Such a move was was envisaged as part of one of Francois Hollande’s last acts in government.
That act by Hollande, the ‘law no. 2016-1691, December 9 2016, relating to transparency, the fight against corruption, and the modernisation of the economy’ scheduled measures to be taken to ensure consumers were more aware of the domiciliation aspect of taking a loan and everything it entailed.
Bruno Le Maire’s bill spells out the benefits of the new 10-year limit.
“This time limit is a step forward in the interest of consumers who previously were forced to domicile revenues for the whole loan period. At the end of the 10-year period they will now be able to switch current accounts to another bank or institution, if they so wish, without affecting the individualised conditions of the loan until it is paid off.”
Some commentators have pointed out that the measure will have little effect as most loans are paid off before 10 years have elapsed. But for consumers, this is nonetheless widely agreed to be a positive move. Mortgages are often a produit d’appel, a loss leader; a way for them to attract customers before offering them additional packages – that are more profitable for the bank – once they are current account holders. The time limit will reduce the ability of banks to maximise takings from new clients in this way.
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