French mortgage rates steady as bond yields near 4% threshold

French banks kept mortgage rates largely unchanged in August, with loan‑price tables for 15‑, 20‑ and 25‑year terms staying near previous levels. Despite the 10‑year French OAT breaking the 4% barrier in July, lenders said the rise had not yet translated into higher mortgage rates, citing a continued focus on attracting borrowers.

Analysts warned that if the OAT remains around 4% for an extended period, banks could gradually pass on higher refinancing costs to new mortgages. Meanwhile, the French mortgage market is dominated by fixed‑rate loans – about 99 % of mortgages – a model praised by the French Banking Federation for protecting households. However, upcoming Basel III prudential rules, fully applying after the current transitional period ends in 2032, may force banks to hold more capital, potentially increasing the cost of long‑term fixed‑rate loans and prompting a shift away from the traditional fixed‑rate structure.