The Banque de France reveals new usury rates for Q1 2025, confirming a downward trend in interest rates for all categories of real estate loans.
In a noteworthy development for the French real estate market, the Banque de France has unveiled the new usury rates that will govern lending practices starting January 1, 2025. This announcement, made on December 27, 2024, signals a continuation of the downward trajectory in interest rates that has characterized the financial landscape in recent months.
The implications of these adjustments are significant for borrowers, as the newly established usury rates reflect a broader trend of decreasing effective rates offered by banking institutions. Specifically, the usury rate for fixed-rate mortgages with a duration of 20 years or more has been set at 5.67%, a decrease from the previous quarter’s 5.85%. Similarly, loans with maturities ranging from 10 to 20 years will now carry a usury rate of 5.80%, down from 6.03%. For loans with terms of less than 10 years, the usury rate has been marginally adjusted to 4.61%, compared to 4.63% at the close of 2024.
In the realm of bridge loans, financial institutions are now restricted from exceeding a rate of 6.64%, a slight reduction from the 6.68% cap established in the fourth quarter of 2024. Variable-rate loans will also see a decrease, with the new limit set at 5.87%, down from the current 5.99%.
These usury rates are meticulously calculated each quarter, based on the interest rates charged by banks over the preceding three months, augmented by a third. This methodology underscores the prevailing decline in real estate interest rates, which has been a consistent theme in recent months. Notably, during the fourth quarter of 2024, the average effective rate for loans with terms of 20 years or more was recorded at 4.25%, a decrease from 4.39% in the preceding quarter.
While this downward trend is undoubtedly positive for prospective borrowers, it is essential to recognize that a return to the pre-crisis usury rates—such as the 2.4% cap for 20-year loans observed in the first quarter of 2022—may require several more months, if not years, of sustained decline. As the credit market becomes increasingly accessible, one can only hope that this trend continues, bringing with it a renewed sense of optimism for those navigating the complexities of real estate financing.
