Mortgages: The 4% mark is getting closer, but banks are still holding back
The yield on the 10-year French government bond (OAT) surpassed 4.19% on September 1 and has since risen above 4.20%, its highest level since 2008. Credit spreads, meanwhile, have moved by only a few basis points. This discrepancy will not last indefinitely.
A broker sums up the situation using an accounting analogy. Since January, the 10-year OAT has risen by about 60 basis points. Over the same period, average mortgage rates have increased by only 10 to 16 points, depending on the term. The banks have absorbed the difference.
They did so because mortgages remain their primary product for acquiring customers. “Despite the strain on the bond markets, banks continue to offer competitive financing terms to support their lending activity. Competition remains particularly fierce for the strongest applications,” explains Pascale Ohnona, CEO of La Centrale de Financement. Borrowers with permanent employment contracts, a down payment, and a comfortable income can still secure rates of 2.70% for a 10-year term and 3.00% for a 20-year term. For others, the average rate for a 20-year term stands at 3.44%, and 3.54% for a 25-year term.
The Cost of 4%
At Artémis Courtage, Ludovic Huzieux estimates the early-September rebound at 0.10 percentage points for short-term loans and 0.15 or 0.20 percentage points for 20- and 25-year loans. His forecast is clear: “Mortgage rates could exceed 4% by early 2027.” ” The broker attributes this trend to the geopolitical context, rising inflation, and a tense pre-election period in France.
The impact on borrowing capacity is easy to see. A household with a net monthly income of 4,000 euros will be able to borrow 250,000 euros in early 2027, compared to 275,300 euros in early 2026—a difference of about 25,000 euros. For a household with a net monthly income of 7,000 euros, the reduction exceeds 44,000 euros.
SeLoger offers another way to look at the numbers. For a 250,000-euro loan over twenty years, a rise from 3.65% to 4% adds about 50 euros per month, with the monthly payment (excluding insurance) climbing from 1,469 to 1,515 euros. Manageable, then, but not painless.
Looking at it in terms of a constant monthly payment provides a third perspective. With a monthly payment of 1,250 euros over twenty years, a borrower would finance 220,383 euros in January 2026 at an average rate of 3.25%. In September, at 3.44%, they can now finance only 216,682 euros—a reduction of 3,700 euros in borrowing capacity, or a 1.6% decline. The two-year comparison, however, remains favorable: in January 2024, at an average rate of 4.20%, the same monthly payment would have financed only 202,734 euros.
Why 2026 Is Different from 2023
Baptiste Capron, CEO of SeLoger, dismisses comparisons with the previous shock. “A rise in rates toward 4% acts as a psychological and financial drag, but we are very far from the solvency crisis experienced in 2022–2023. Back then, the market took the full brunt of rising rates at a time when prices were at their peak. Today, prices have fallen, and banks are actively seeking to attract new customers.” In several major cities, including Paris, prices have fallen by as much as 10% from their peak. The adjustment can now be achieved through negotiation of the property price, not just the interest rate.”
The market, meanwhile, remains sluggish. The volume of transactions in the existing-home market has held steady at around 955,000 cumulative sales over a 12-month period. In the new-home market, housing permits reached 384,000 units over a 12-month period in March 2026 before declining in the summer, and housing starts rebounded to 296,000 units in July. The bill sponsored by Housing Minister Vincent Jeanbrun, which passed its first reading in the Senate on July 8, will go before the National Assembly in the fall.
The profile of borrowers provides a fairly good indication of who is still able to buy a home. In August, the typical first-time homebuyer tracked by La Centrale de Financement took out a loan of 204,000 euros over 23 years and 10 months, with a 15% down payment, an annual household income of 46,700 euros, and an average age of 33. Second-time homebuyers, on the other hand, borrowed 256,000 euros over a term of twenty-two years and three months, with a 25% down payment and an annual income of 72,600 euros, at an average age of 40. A ten-point difference in down payment and 26,000 euros in annual income separate these two groups.
That leaves the question on everyone’s mind in the industry: How long will banks be willing to cut into their margins on a loss leader whose refinancing costs are rising?
