Fixed-Rate Mortgages: France Holds Firm as the Euro Area Shortens Its Fixes

A fixed-rate mortgage leaves interest-rate risk with the lender; a variable-rate loan passes it to the borrower. How new lending splits between the two decides how fast a rate rise reaches household budgets.

Since the 2022 rate shock, European bank lending has been said to be abandoning the fixed rate. ECB statistics contradict that for France and reduce it, for the euro area, to shorter fixation periods.

The retreat the data does not show

In June 2026, 95% of new housing loans granted in France carried a fixed rate, according to the French Banking Federation (FBF), which draws on ECB statistics in its August 2026 report on household financing. Loans at a variable rate, or fixed for one year at most, made up 5%. The same share stood at 16% for the euro area, 12% in Germany, 20% in Italy and 8% in Spain.

The story of a retreat from fixed-rate lending rests on a sound intuition. A bank that lends at a fixed rate for twenty years while funding itself partly short term loses margin when rates rise. After 2022-2023, it had every reason to shorten its commitments. The question is back because the ECB has resumed tightening: its deposit facility rate rose from 2.00% to 2.50% in two steps, effective 17 June and 16 September 2026.

French lending shows nothing of the kind. Maturities have lengthened. The Observatoire Crédit Logement, quoted by the FBF, puts the average term of loans granted in June 2026 at 21.2 years, well above its level in the early 2000s.

France came through the shock with its fixed rate intact.

Shorter fixes in the euro area, with no shift to floating

The genuine change sits at euro area level and concerns the length of the initial rate fixation. Each month the ECB splits new housing loans to households into four buckets: variable or fixed up to one year, one to five years, five to ten years, and over ten years (MFI interest rate statistics, MIR dataset). Fixations beyond ten years accounted for 60.2% of volumes in 2021. They dropped to 49.6% in 2023, recovered to 52.8% in 2025 and slipped back to 49.1% in January-August 2026. Lending itself followed the cycle: €1,048 billion of new housing loans in 2021, €680 billion in 2023 and €930 billion in 2025, renegotiations included.

Intermediate maturities took the ground. A loan with a five-year initial fixation behaves as a fixed-rate loan for five years, then resets to a market-linked rate: the borrower meets the rate cycle later, but does meet it. One-to-ten-year fixes rose from 24.8% to 35.4% of volumes between 2021 and 2026. Floating-rate lending did swell during the shock, peaking at 25.5% in December 2022 and averaging 21.5% over 2023. It then fell back to 13.9% in 2025 and 15.6% in 2026, barely above its 2021 level of 15.0%.

The baseline matters as much as the slope. 2021 is the high point of a series published since 2003 for the euro area in its changing composition: long fixes had never weighed more. In 2004 and 2005, variable-rate loans made up 54% of euro area lending, and still 26.6% in 2014. Over two decades, European mortgage lending moved towards the French model. The decline since 2021 brings the long-fix share back to its 2015-2019 range of 47% to 55% without reversing that long trend.

Nor does the United States fit the idea of an Anglo-Saxon world wedded to floating rates. In the second quarter of 2026, 95.8% of outstanding US mortgages were fixed-rate loans of 15 or 30 years, according to the FHFA’s National Mortgage Database.

Why the long fix carries no premium

A bank wanting to move away from fixed rates could do so through pricing, by charging more for long fixes. Actual lending rates show no such premium. In August 2026, the latest month published, French housing loans fixed for over ten years carried an average rate of 3.21%, against 3.84% for variable or sub-one-year loans and 2.36% for five-to-ten-year fixes. The euro area gap points the same way, at 3.43% against 3.86%.

Since January 2022, the French over-ten-year rate has stayed below the variable rate in 44 months out of 56. The exceptions cluster between June 2022 and June 2023, at the height of the deposit-rate increases. Variable loans track short-term rates anchored to ECB policy, while long fixes are priced off long-term market rates, an arrangement that has seldom favoured floating since 2022.

The size of the French variable segment offers one reading of the gap: at 5% of volumes, it covers less standard cases, and its average reflects that mix. The all-maturity average, tracked in monthly French mortgage rate data, rose from 2.99% in December 2025 to 3.20% in August 2026. The borrower’s own choice between the two formulas is another question, covered in the fixed versus adjustable trade-off across the rate cycle.

Where rate risk actually travels

A fixed rate does not remove interest-rate risk; it reassigns it. For borrowers, the risk is concentrated at signing. On €250,000 borrowed over 20 years, two extra percentage points add €263 a month starting from 3% and €276 starting from 4% (Eco3min calculation, level payments, excluding insurance). New buyers absorb the shock, while existing loans are untouched.

For banks, the risk stays on the balance sheet. When the ECB deposit rate went from −0.50% to 4.00% between July 2022 and September 2023 (ECB, FM dataset), funding costs rose faster than the yield on a stock of loans fixed for twenty years. Hedging changes where that risk lands without making it vanish: an interest rate swap lets a lender turn fixed-rate assets into floating-rate ones, passing the exposure to a counterparty, and the cost of that hedge ends up in the rate offered to the next borrower. The European Banking Authority frames this interest rate risk in the banking book (IRRBB) in guidelines published on 20 October 2022 (EBA/GL/2022/14).

Where floating rates take a larger share of new lending, a rise also reaches existing borrowers at each reset, which separates Italy, at 20% variable in June 2026, from France at 5%. Between the two models, the main macroeconomic difference is the speed at which a policy decision reaches household cash flow. How such a jump hits different borrower profiles can be tested in a rate-reset calculator for variable mortgages.

Two developments would undermine this reading. One would be a lasting rise in France’s variable share, which never exceeds 5% on the FBF chart going back to December 2018. The other would be regulatory. The FBF itself warns, at the top of the same report, that international regulatory changes could threaten the French model. A tougher prudential treatment of rate risk would push pricing towards shorter fixes, as in the wider euro area.

Tracking the question takes just two markers. In the ECB’s monthly data, a euro area share of over-ten-year fixes held below 50% of volumes would entrench the shorter-fix pattern; in August 2026 it stood at 47.2%, its lowest since February 2024. In France, a variable share breaking out of its 5% band, as reported by the FBF, would signal a change of model.

The rate shock has travelled through new lending and bank balance sheets far more than through payments on existing loans. How it then fed into house prices, and why the response differed so much by country, is the subject of our analysis of the mortgage credit cycle and housing prices.

Last updated — 8 October 2026