OAT (rate benchmark)
Obligation Assimilable du Trésor: a French government bond whose yield, notably the 10-year OAT, acts as a barometer for fixed-rate mortgage pricing. When the OAT rises, banks sooner or later pass the increase into their grids. Tracking this benchmark helps anticipate favorable windows.
Key points
- The 10-year OAT is the primary pricing benchmark for fixed-rate mortgages in France.
- Issued by the French state, its yield reflects sovereign risk perception and inflation expectations.
- Banks add their commercial margin to the OAT yield to set their rate grids.
- Tracking the OAT helps anticipate rate grid movements a few weeks ahead.
Frequently asked questions
Why do fixed mortgage rates follow the 10-year OAT rather than Euribor?
Variable rates are indexed to Euribor because it reflects the short-term refinancing cost on the interbank market. Fixed rates, however, commit the bank over a long period; it therefore refinances on long-term bond markets, for which the 10-year OAT is the main French barometer. A 20-year fixed-rate loan is thus backed by a resource of comparable duration.
How does a broker use OAT monitoring in their advisory work?
By watching the 10-year OAT trend over recent weeks, the broker can estimate whether bank grids will rise, fall, or stabilise in the coming weeks. This allows them to anticipate the best time to submit a file or to advise a client to accept a current offer rather than waiting for a hypothetical dip. Note: the link is not mechanical and bank margins vary independently.
What is the difference between the OAT and Euribor as rate benchmarks?
The OAT is a long-term sovereign rate (typically 10 years) reflecting government bond market conditions. Euribor is a short-term interbank rate (1 to 12 months) reflecting the refinancing cost between eurozone banks. One drives long fixed rates, the other short variable rates. During an inverted yield curve, the OAT can be below Euribor, with implications for the relative pricing of the two product types.
In practice
In October 2023, the 10-year OAT rises to 3.55%; a few weeks later, a broker notices that their partner banks have raised their grids by 20 to 30 basis points, confirming the link between the sovereign benchmark and commercial offers.
Official sources
- Fungible Treasury Bond (OAT) — overview · Agence France Trésor
- The annual percentage rate (APRC) · Service-Public.gouv.fr
- Mortgage credit (official guide) · Service-Public.gouv.fr