Good news for France’s real estate buyers! January mortgage rates show declines, with one bank offering rates under 3%. Discover the latest trends now.
In a remarkable turn of events within the France’s real estate market, mortgage rates are experiencing a notable decline, with one bank daring to offer rates dipping below the 3% threshold. The initial mortgage rate schedules for January, disseminated by banks to brokers, reveal a continued downward trajectory. The prospect of achieving an average rate of 3% within the first quarter appears increasingly plausible, with the tantalizing possibility of rates plummeting to 2.5% by the close of 2025.
As one broker aptly remarked, “Today, if you’re looking for a mortgage, you find it!” This sentiment underscores the favorable conditions that have emerged for real estate borrowers over the past year, particularly following the dramatic quadrupling of credit rates from early 2022 to the end of 2023. The latest data from early January 2025 indicates that, for the 14th consecutive month, banks have implemented further rate reductions, ranging from 0.05 to 0.20 percentage points compared to December. This adjustment has brought the average rate for a 20-year mortgage down to approximately 3.20%. Notably, one institution has even ventured to offer a rate of 2.99% for a 20-year term, a first since March 2023, when rates had ascended to the 3% mark after languishing at around 1% for several years.
This development can be characterized as an “offer of appeal, of reconquest,” signaling that banks are eager to lend and are poised at the starting blocks. The proactive stance of several credit institutions is evident, as they dispatched their January rate schedules to brokers as early as December, following the European Central Bank’s rate cut on December 12. This contrasts sharply with the customary timeline, where such information is typically shared around January 10, allowing banks to calibrate their strategies.
The urgency to lend is further underscored by the fact that many banks have yet to meet their commercial objectives for 2024. A prominent national bank has recently reduced its rates by 0.15 percentage points across all loan maturities, a noteworthy move given that the 10-year OAT (a benchmark Treasury bond influencing bank rates) currently stands at 3.20%, amidst prevailing political uncertainties in France. This shift is likely to compel other banks to follow suit.
As for the tantalizing prospect of average mortgage rates dipping below the 3% threshold in the first quarter, this remains contingent upon the OAT not experiencing further increases. Some banks have successfully negotiated rates of 2.80% for 10-year terms, 3.01% for 15 years, 3.05% for 20 years, and 3.15% for 25 years—each representing a significant reduction of over 1% compared to the rates offered in December 2023, which had peaked above 4%.
To put this into perspective, a mere 1% difference on a loan of €200,000 over 25 years translates to a staggering saving of €25,000. Coupled with a decline in property prices, this decrease in rates enables prospective buyers to acquire an additional 11.02 square meters in Reims, 9.32 square meters in Nantes, and approximately 8 extra square meters in Lille, Montpellier, Strasbourg, or Toulouse, all based on a monthly loan payment of €1,000, as detailed by the broker.
The enthusiasm among potential real estate purchasers is palpable; despite December typically being a quiet month, Vousfinancer reported a remarkable 30% increase in signed mandates and a 40% surge in financed amounts compared to December 2023. This surge in activity reflects the shifting dynamics of the market, as borrowers seize the opportunity presented by falling rates and declining property prices.
