Mortgage-financed real estate is not an ordinary asset. Under monetary tightening, leverage amplifies risk and reframes the patrimonial reading. Real cost of debt and illiquidity, not headline mortgage rates, become the central variables.
A 20-year fixed-rate mortgage locks a nominal cost while inflation erodes real debt. Time progressively reshapes the structure of patrimonial risk.
Comparing real estate and financial assets through gross yield alone misses leverage, liquidity, taxation, and horizon. Two distinct balance-sheet logics that don’t translate into each other.
Owner-occupiers pay themselves an in-kind implicit rent, a real but rarely measured flow worth around 10% of French GDP. This analysis explains how it reshapes the buy-versus-rent comparison.
Mortgage credit's long duration, high leverage and illiquid collateral make it a natural amplifier of financial cycles. More than two-thirds of banking crises in advanced economies since 1970 were preceded by a mortgage credit boom — a regularity that explains why prudential supervision targets this segment specifically.
Residential property prices are not set first by supply and demand, but by the marginal buyer's borrowing capacity. Reading that mechanism — rates, loan terms, lending standards — is reading the housing market before prices move.
Between a rate hike and a housing-price correction sits the link most observers skip: the credit cycle. It is where monetary policy actually transmits to real estate, and its own lags govern both the timing and the depth of any…
