France: Will the drop in BCE rates really relaunch the real estate market?

The European financial landscape has just experienced a major turning point with the decision of the European Central Bank (ECB) to lower its key rates of 0.25 percentage points. A measure that does not go unnoticed in a context where access to mortgage credit remains a capital issue for households and investors. This drop could stimulate demand and redraw the market dynamics, but observers remain shared on its real scope.

A monetary easing with immediate repercussions

On March 6, 2025, the European Central Bank announced a new drop in its three guiding rates to support the slowdown in inflation and support growth. Indeed, Christine Lagarde, president of the institution, stresses that this decision aims to “make new loans cheaper for businesses and households” and to “soften a monetary policy which had become too restrictive in the face of current market dynamics”.

Concretely, it should be noted that:

• The rate of the main refinancing operations was lowered to 2.65 %;
• The ease of deposit drops to 2.50 %;
• Marginal loan ease at 2.90 %.

Such a decision has a direct impact on real estate credits, which are intimately linked to the monetary policy of the ECB. Banking establishments, now able to borrow at a reduced cost, are starting to adjust their offers. Simulations show that a borrower benefiting from a rate of 3 % instead of 3.8 % for a loan of 350,000 euros could save more than 33,000 euros over the total duration of the credit. However, this adjustment is not immediately translated into a uniform drop in the rates practiced by banks, as the latter also incorporate other criteria such as the risk of defect and the economic market.

Towards sustainable market revival or temporary stabilization?

If the drop in guiding rates is good news for borrowers, it does not guarantee an automatic recovery in the real estate market. Several large financial institutions, such as Goldman Sachs, Nomura and Barclays, believe that the ECB could continue this trajectory with two additional declines in 2025, which would further accentuate accessibility to credit. For their part, some observers plan stabilization of real estate rates around 2.6-2.8 % By the end of the year, a favorable perspective for those who are considering a medium -term real estate purchase.

However, factors of prudence remain. The macroeconomic environment remains marked by geopolitical uncertainties, increased commercial barriers and a slowdown in growth in several countries in the euro zone. In addition, although the rates are more attractive, banks remain demanding about borrowing profiles, which promotes the strongest files. This situation could thus maintain a market segmentation, where only candidates who have a good reimbursement capacity will benefit from the most advantageous conditions.

While this drop in rates appears to be a window of opportunity for real estate investors, it does not solve the structural tensions of the market. The demand should go back gradually, but without a softening of the granting criteria and a lasting stabilization of the economy, the hoped lever effect could be limited.