Lower rates and renewed confidence pushed French mortgage lending to €146.5B in 2025 (+33% YoY), aiding first‑time buyers—yet refinancing costs and public debt pose risks.
The French mortgage market staged a sharp recovery in 2025 after a historically weak 2024, according to the Banque de France. Borrowers took out €146.5 billion in new housing loans (excluding renegotiations), a 33% increase year‑on‑year from roughly €110 billion in 2024 and a marked rebound from the peaks above €200 billion seen in 2021–2022.
Why lending rose
The rebound has been driven primarily by a relative easing of mortgage rates and a gradual return of buyer confidence. Average mortgage rates started 2025 around 3.30% and finished the year just above 3%, giving many prospective buyers fresh room to act. Since mid‑2025 rates have been relatively stable, although the Banque de France warns the situation remains fragile.
A boost for first‑time buyers
First‑time buyers have been among the main beneficiaries. The Banque de France reports that the number of loans to first‑time purchasers grew faster than home sales and loans to all borrowers (excluding renegotiations) since the start of 2025. Banks are actively supporting this group with measures such as additional zero‑interest loans (PTZ), subsidised packages, reduced application fees and “boost” envelopes representing roughly 10% of borrowed amounts. New owners typically take on mortgages for around 24 years on average, slightly longer than other buyer profiles to keep monthly costs manageable.
Banks regain margins as volumes recover
The return of real estate activity has improved retail bank performance. Higher volumes combined with the 2025 rate environment helped lenders maintain comfortable margins. Financial results published late in the year show retail networks outperformed 2024, driven notably by the mortgage recovery.
Caveats and risks ahead
Despite the rebound, risks could reverse the trend. The Banque de France highlights pressure on refinancing costs tied to uncertainty around the State budget. French banks depend in part on market funding at rates linked to public debt; by the end of 2025, yields on French debt climbed to levels not seen in nearly 15 years. That upward pressure on borrowing costs could tighten lending conditions over time.
Snapshot: key figures
• New housing loans (excluding renegotiations) in 2025: €146.5 billion (+33% vs. 2024)
• 2024 level: ~€110 billion (ten‑year low)
• Dec 2025 new loans: €12.8 billion
• Average rate late 2025: roughly 3% (start of year ~3.30%)
• Q4 2025 average all‑in rate for 20+ year loans: 3.85% (≈€43,500 in interest per €100,000 borrowed over 20 years)What this means for buyers
Lower and stable‑ish rates created an opening for many households—especially first‑time buyers—to reenter the market. However, prospective borrowers should factor in potential rate shifts if public borrowing costs rise and lenders tighten conditions. Working with advisers to compare offers, check all‑in rates (including insurance and fees), and set realistic repayment horizons remains essential.
