Will mortgage rates rise if the National Assembly comes to power?

If the National Assembly (NA) comes to power, “a loan will cost more”confirmed the President of the Republic, Emmanuel Macron, at his press conference on Wednesday, June 12. “If the National Assembly was held accountable, what would happen to your real estate loans? They will skyrocket as prices skyrocket », he insisted in response to a journalist’s question.

Until the announcement of the dissolution, however, the matter appeared to be settled: after the European Central Bank’s decision to cut its key rates on Thursday, a move to cut mortgage rates began at the beginning of the year. will continue in the coming months. The result of the European elections on Sunday 9 June and the announcement of the dissolution of the National Assembly changed this scenario.

The day after the vote, the ten-year assimilable government bond (OAT) rate jumped. “Brutal movement over surprise announcement to dissolve National Assembly”, analyzes Christopher Dembik, Investment Strategy Advisor at Pictet AM. The 10-year OAT rate is now around 3.25%, compared to an average of 2.99% in May and 2.80% in the first quarter. “We found November 2023 levels”notes Cécile Roquelaure, director of studies at Empruntis.

In graphics | Article reserved for our subscribers Real estate loans: 2023, cold shower

However, the development of the ten-year OAT depends on the development of real estate loan rates. “Traditionally, it was thought that the 10-year lending rate needed to be 100 basis points higher than the 10-year OAT for banks to lend at a sufficient margin”, explains Cécile Roquelaure. It is understood that those who borrow during this period could theoretically pay 4.25% in the coming weeks, compared to 3.60% currently.

A break in the decline?

Certainly, some networks with large deposits are less inclined to refinance in the markets and therefore less sensitive to shocks in the bond markets. Moreover, the peaks experienced by the OAT rate in recent months have had no effect on the downward movement of mortgage rates. “We’ve been about 70 basis points above OAT for several months now”notes Pierre Chapon, co-founder of Pretto.

For now, “we do not observe an increase in loans and banks continue to lend”, suggests Ludovic Huzieux, co-founder of Artemis Courtage. After you have almost turned off the home loan tap, “Banks have fixed goals in this sector that are difficult to achieve. It is difficult in this area stop and gocompetition between establishments, which is a brake on rate growth, should continue”judge Caroline Arnould, CEO of broker Cafpi.

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