The Lyon market and its financing
When will mortgage rates fall? The state of the market, month by month
The ECB, the 10-year OAT, the bank margin: what truly drives rates, the 6- and 12-month scenarios, and the method for deciding between waiting and buying.
No one knows the date of the next fall in mortgage rates. What is known is the mechanism: the rate obtained emerges from a four-link chain, the European Central Bank’s benchmark rates, the 10-year OAT, each bank’s margin and the usury ceiling, and it follows an ECB decision with a lag of several months. A fall in rates can be recovered through renegotiation; a rise, cannot.
By Sandy MASCART, mandataire d'intermédiaire en opérations de banque et en services de paiement ORIAS 26000541 sous le mandat de CDV PATRIMOINE & ASSURANCE (ORIAS 14005573)
Key points
- The rate obtained results from a four-link chain: the ECB’s benchmark rates, the 10-year OAT, the bank margin and the usury ceiling.
- Mortgage rates do not immediately follow an ECB decision: the lag is measured in months, not days.
- A fall in rates can be recovered through renegotiation; a rise, cannot: it is this asymmetry that must weigh on the decision to wait.
- A loan offer issued fixes the rate for its validity period: a market rise after issuance does not alter it.
- The dispersion of rates between institutions, at any given moment, often exceeds the amplitude of the market movements of the quarter.
No one knows the date of the next rate cut. Identify the prices that drive interest rates and the signs of a reversal, then decide whether to buy or wait on the Lyon market.
Where do interest rates stand this month?
Read the dated official figures: a rate quoted by an intermediary becomes outdated within a few weeks.
Where to find them: reading the rates.
Who actually sets mortgage interest rates?
A chain with four links: the European Central Bank’s key interest rates, the 10-year OAT, each bank’s margin and the usury ceiling.
The European Central Bank’s key interest rates
C'est le taux directeur qui pilote aujourd'hui les conditions monétaires de la zone euro : il rémunère les réserves que les banques déposent auprès de l'Eurosystème.
- En vigueur depuis le
- Source
- data-api.ecb.europa.eu
- En vigueur depuis le
- Source
- data-api.ecb.europa.eu
For a fixed rate, they are primarily a signal that guides long-term rates.
The 10-year OAT
The most predictive link: when it moves, rate grids follow within a few weeks to a few months, rising faster than they fall.
Bank margins
An aggressive bank in one quarter may withdraw in the next, without any market rate having moved.
The usury cap
- En vigueur depuis le
- Source
- Légifrance
It caps the rates, with a lag in both directions: see its construction.
Why do mortgage rates not immediately follow the ECB's decisions?
The lender lends a resource purchased before the decision and revises its grids at fixed dates: count months.
An expected decision is often already in the long-term rates, and your loan offer comes from a grid published before your appointment.
The 6- and 12-month scenarios
Easing, plateau or rise: monitor the signal that would shift from one to the other.
- Fall: sovereign rates in reflux, confirmed easing, banks in conquest.
- Plateau: the gap between banks becomes the only variable.
- Rise: inflation, sovereign risk or commercial withdrawal of banks.
A fall can be recovered, a rise cannot. If rates fall after your purchase, renegotiate. If they rise while you wait, your borrowing capacity falls.
Should you wait for a fall to buy?
Do the calculation: gain in instalment, price rise that would cancel it, cost of waiting, risk of tightening.
With the instalment formula:
- The gain: simulate the instalment at today's rate, then at the expected rate.
- What cancels it: prices that rise faster. See the price per square metre by district.
- The wait: rents paid, a year of amortisation less.
- The tightening: required down payment and savings harden at the worst moment. See the personal down payment.
Buying then renegotiating requires a sufficient rate gap, a high outstanding capital and readable exit fees.
What if interest rates move after your loan offer?
The issued offer fixes the rate: an increase before your acceptance does not change it.
- Délai de réflexion de l'emprunteur 10 jours
- Maintien minimal des conditions de l'offre 30 jours
- En vigueur depuis le
- Source
- Article L. 313-34 du code de la consommation — Légifrance
If rates are rising, obtain the offer quickly. If they are falling, request a reissue before accepting: see the cooling-off period. A variable rate? Read the clause.
The indicators to monitor yourself
Four public series: the 10-year OAT, the ECB meetings, the usury thresholds and the rate on new residential loans.
- The 10-year sovereign rate, weekly: aft.gouv.fr.
- The ECB decisions, compared to the expected rate: ecb.europa.eu.
- The usury thresholds, quarterly: banque-france.fr.
- New loans, which confirm a trend; the Crédit Logement/CSA series has a different scope.
Also ask for the delay between the agreement in principle and the issuance of the offer.
The right institution matters more than the right moment
The dispersion between institutions is greater than the market variation. Finding the right institution yields more than finding the right moment. And waiting is only useful if it prepares the file.
Buy now or in a few months? Create your file or run both calculations over the phone.
Sources
Read next
- Mortgage in Lyon: one file, several banks
- Reading a mortgage rate: nominal, APR, usury threshold, and the gap between Lyon and the regions Nominal rate, APR, TAEA, average effective rate, usury threshold: what each figure covers, where to read the official reports, why yours will differ.
- Renegotiating your mortgage or having it refinanced: the calculation that tells you whether it is worthwhile Renegotiating or refinancing your mortgage is only worthwhile if the interest saved exceeds all costs. The method in six lines, and when to abstain.
- The mortgage interest rate barometer: where it is published, and what it does not say The average rate recorded each month by the Crédit Logement/CSA Observatory: where to read it, with its scope and date, and why it is not yours.
- Price per square metre by district in Lyon: where to read the medians, and what your budget buys Price per square metre in Lyon: where to read the median of actual sales in each district, the caveats involved, and the floor area your budget can purchase.
All articles on this topic: The Lyon market and its financing