Spread (bank margin)
The difference between the nominal rate of a loan and its reference index (OAT or Euribor). It represents the commercial and risk margin the bank adds to its funding cost. A broker negotiates the spread downward to obtain a better client rate. On a variable-rate loan the spread is fixed throughout while the index fluctuates; on a fixed-rate loan it is embedded in the stated nominal rate from the outset.
Key points
- The spread is fixed contractually at origination and does not change.
- On a fixed-rate loan it is absorbed into the stated nominal rate; it does not appear separately.
- On a variable-rate loan, client rate = index (Euribor/OAT) + spread.
- Reducing the spread by one tenth of a point delivers a concrete saving over the term.
Frequently asked questions
How does the broker negotiate the spread downward?
By benchmarking multiple banks simultaneously and presenting a strong file (high down payment, stable income, low risk profile). A bank may agree to reduce its spread to win a good client, especially if income domiciliation is offered in return. The broker compares offers not on the headline rate but on the net spread so as to reason on a constant-index basis.
Is the spread the same for all borrower profiles?
No, the bank adjusts its spread according to perceived risk: a senior permanent-contract employee with substantial savings will obtain a lower spread than a self-employed borrower with variable income. Down-payment level, residual debt ratio, and whether income is domiciled at the lending bank are the main spread adjustment levers.
Why is the spread more visible on a variable-rate loan than on a fixed-rate loan?
On a variable-rate loan the rate is expressed as 'Euribor 12-month + X%', making the spread explicit in the contract. On a fixed-rate loan the bank simply announces a single nominal rate that already incorporates both the spread and the refinancing cost, without separating them. The broker can nonetheless estimate the implicit spread of a fixed loan by comparing it to the OAT cost for the same maturity.
In practice
Two banks quote a 20-year variable-rate loan. Bank A offers Euribor 12-month + 0.90%; Bank B offers Euribor 12-month + 1.10%. All else equal, the broker recommends Bank A because its spread is 20 basis points lower.
Official sources
- The annual percentage rate (APRC) · Service-Public.gouv.fr
- Mortgage credit (official guide) · Service-Public.gouv.fr