![Real estate loan: after the dissolution, already the end of the drop in rates? Real estate loan: after the dissolution, already the end of the drop in rates?](https://cap.img.pmdstatic.net/fit/https.3A.2F.2Fi.2Epmdstatic.2Enet.2Fcap.2F2024.2F06.2F10.2F6735782d-22fa-4680-8057-774b0346c5c9.2Ejpeg/1200x630/focus-point/1743%2C1430/cr/wqkgSWxsdXN0cmF0aW9uIENhcGl0YWwvRnJlZXBpayAvIENBUElUQUw%3D/credit-immobilier-apres-la-dissolution-deja-la-fin-de-la-baisse-des-taux-1498018.jpg)
Dissolution of the national assembly
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The markets did not cause the French debt rate to soar after the announcement of the dissolution of the National Assembly. Banks should therefore continue to lower mortgage rates in the coming months.
© Illustration Capital/Freepik
Is political instability likely to worry French banks and borrowers? For now, the answer is no. After the announcement of the dissolution of the National Assembly by President Emmanuel Macron on June 9, the markets did not really sanction France. This Monday, June 10, the rate of the French 10-year debt – also called Obligation assimilables du Trésor (OAT) – increased by only 0.10 points compared to its level on Friday evening at 3.19%. “There is therefore no panic at this stage”, comments Alexandre Baradez, head of market analysis at IG France. As a reminder, the level of the 10-year OAT rose to 3.6% in October.
Technical in appearance and far from the daily lives of the French, the level of remuneration of the country’s debt is nevertheless much greater than it seems. It determines the rates charged by the banks. “The cost of real estate loans is correlated to that of the OAT. To make money, banks buy French debt for interest. They therefore have no reason to offer credit rates lower than this remuneration., explains Patrick Artus, economist and advisor to the manager Natixis. In other words: an increase in the OAT yield would mechanically cause a similar movement for the interest rates on real estate loans.
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“We, and all banks elsewhere, intend to continue to lend under the best conditions”
Especially since the banks are simultaneously benefiting from the monetary easing carried out by the European Central Bank. The ECB has just reduced all of its key rates by 0.25 points, including its refinancing rate. The latter allows banks to easily access liquidity to lend to households and businesses.
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“The slight increase in OATs changes almost nothing for usconfirms a major French banker. We, and all banks for that matter, intend to continue to lend under the best conditions and win over customers.”
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But what would happen if the National Rally were to take power after the future legislative elections, on July 7? According to Patrick Artus, this would not be the catastrophe predicted for borrowers: “When you govern a European country, decision-making is done within the framework of the European Union. With in particular the budgetary, monetary and prudential rules. The National Rally’s expensive program could ultimately be transformed, like that of Giorgia Meloni in Italy, into a more rigorous budgetary policy.» So many factors likely to reassure the markets, keep the French debt rate afloat and, ultimately, allow credit rates to continue their decline.
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