Conflict in Iran Raises Interest Rates, Threatens French Mortgages

(MENAFN) The ongoing conflict in Iran is beginning to affect mortgage lending in France by pushing interest rates higher, according to reports.

The blockade of the Strait of Hormuz is having consequences beyond rising fuel costs, also contributing to higher mortgage rates and creating additional pressure for French residents planning to buy property.

In particular, rising yields on government bonds, especially the French 10-year OAT, are expected to directly influence borrowers, as these yields act as a benchmark for home loans.

On Friday, the 10-year OAT surged to nearly 3.90%, reaching levels not seen since the 2009 financial crisis.

The jump prompted several banks to increase their rate schedules for April by an average of 0.10 percentage points, with one institution raising rates by as much as 0.30 points.

"Other banks will follow with similarly strong increases,” said Pierre Chapon, co-founder of broker Pretto.

Interest rates had been rising earlier due to budget constraints and public debt concerns, though they eased slightly earlier this year. The latest spike, however, comes at an inconvenient time for lenders.

For now, the effect on borrowers remains manageable and does not fundamentally change the affordability of purchasing property. “The increases in borrowing costs remain limited for now,” noted Eric Allouche, head of the Era Immobilier network in France.

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