The real estate loan market is entering a major shift at the start of 2025. After a rapid increase between 2022 and 2023, interest rates have been falling continuously for more than a year, with the hope that they will pass below the symbolic bar of 3% in the months to come. This development, fueled by the slowdown in inflation and the relaxed monetary policy of the European Central Bank (ECB), is attracting the attention of households and investors. However, these promising figures come against a fragile economic context, marked by weak growth and increasing financial uncertainties. It therefore becomes essential to understand the underlying issues and their implications for the future.
A decline in rates driven by cyclical factors
For a year, mortgage rates have been falling steadily, which contrasts with the surge observed between 2022 and 2023, where they quadrupled in the space of two years. In January 2025, the average rate on home loans, all durations combined, stood at 3.24%, which marks a decrease compared to the 3.38% recorded in the last quarter of 2024. This trend can be explained mainly by the marked slowdown in inflation, as explained by Michel Mouillart, professor of economics and member of the Crédit Logement/CSA observatory, which asserts : “the very strong slowdown in inflation allowed the ECB to lower its key rates”.
Such monetary policy, characterized by a reduction of 100 basis points in 2024, is expected to continue in 2025, with a further expected reduction of 75 basis points. Thanks to these adjustments, banking institutions were able to reduce their refinancing costs, which helped improve credit conditions for households. However, according to projections, this decline could stop as early as summer 2025, during which time rates should stabilize around 2.85%. These forecasts reflect a situation where the positive effects of flexible monetary policy are beginning to come up against the limits imposed by a fragile economic context and tensions on the bond markets.
Future stabilization and its challenges
From summer 2025, mortgage rates should stabilize around 2.85%. They thus return to the levels observed in 2014. According to Michel Mouillart, professor of economics and member of the Crédit Logement/CSA observatory, “this stabilization marks the end of a cycle of decline initiated by the ECB”. However, this lull could be partially mitigated by unfavorable external factors. These include the growing cost of French sovereign debt, now above 3%, as well as increased tensions in international bond markets.
In this context, the stabilization of rates is part of a delicate economic situation. French growth, projected at less than 1% in 2025, remains insufficient to offset the negative effects of rising unemployment. These fragile economic conditions risk affecting the real estate purchasing power of households, and reducing their ability to borrow, despite rates deemed “correct and acceptable”. As a result, the poorest households could see their acquisition plans compromised, which would accentuate disparities on the market.
Furthermore, for real estate investors, this stabilization could represent a window of opportunity. Rates close to 2.85% still offer attractive financing conditions, particularly for long-term projects. However, these opportunities must be evaluated with caution, given the looming economic and financial risks. The uncertainties linked to market tensions and a possible increase in the cost of living require rigorous anticipation to maximize profits in this new financial environment.
This stabilization of rates opens up promising prospects for borrowers and investors in the years to come. By creating a more predictable financing environment, it could encourage new projects. However, the positive effects of these rates remain limited by a fragile economic context, characterized by moderate growth and lasting tensions on the financial markets. In this context, households and investors will have to reconcile prudence and strategy, faced with borrowing conditions influenced by complex and unpredictable global dynamics.
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