Good news for buyers! March sees a slight decrease in France home loan rates, averaging 3.35% for 20-year loans. Discover the latest trends.
In a rather unexpected turn of events, the realm of home loans in France has witnessed a modest decline in interest rates this March, much to the relief of prospective buyers. Following a rather unsettling uptick in February—an anomaly not observed in over a year—mortgage rates are once again trending downward, as indicated by preliminary data from brokers.
The onset of February had left many potential homeowners and real estate professionals in a state of disarray, as the first signs of rising credit rates emerged. However, March brings with it a glimmer of optimism, with rates experiencing a slight decrease of approximately 0.05 to 0.10 percentage points compared to the previous month. Currently, the average rate for 20-year loans hovers around 3.35%, suggesting a favorable shift in the market.
As we approach what is traditionally deemed the “real estate spring,” a period characterized by heightened activity in home purchases from March to May, the anticipation of further rate reductions looms large. Notably, Société Générale (SG) had previously astonished its competitors by offering rates below the 3% mark in February, leading many to wonder whether this enticing offer will be extended into March. While indications suggest a likelihood of continuation, official confirmation remains pending.
Yet, amidst this cautious optimism, it is essential to temper expectations. The prospect of a new rate cut by the European Central Bank (ECB) on March 6 could be perceived as a harbinger of further reductions; however, the reality is more nuanced. The correlation between average mortgage rates and the ECB’s key rates is not as direct as one might assume. Instead, these rates are more closely tied to the yields of France’s 10-year government bonds. Given the prevailing political instability in France, which hampers meaningful fiscal consolidation, the risk premium associated with these bonds is expected to remain elevated.
In a broader context, the current average rates are a significant improvement compared to the more than 4% observed in the autumn of 2023, a period marked by a quadrupling of rates over two years amid rampant inflation. Thus, while the landscape of home loans in France may not yet be a veritable utopia for buyers, the recent developments certainly provide a more favorable environment for those looking to invest in property.
