Real estate: Loans explode again in France!

The mortgage market, for a long time to stop, began a clear recovery. In two months, the loan demand almost doubled, brought by a drop in rates and a reopening of bank valves. After two years of blocking linked to the sudden increase in the cost of money, the reversal was expected. However, is this embellished durable or a simple catch-up effect? While an inflection marks, the sector wonders: are you witnessing at the start of a cycle or a fragile parenthesis?

A tangible recovery carried by the drop in rates

Real estate prices go up after eighteen months of decline. Thus, the request for real estate credits in France has experienced a clear recovery since the beginning of spring. According to figures from the Banque de Francethe amount of new loans reached 12.6 billion euros in April, compared to 6.9 billion euros in February, which then marked a lower in the decade.

After a year 2024 complicated for the real estate market, the recovery signals were confirmed. The trigger for this trend reversal is the marked drop in interest rates, which began in the first quarter of the year.

Here are the most competitive levels observed:

• 2.55 % over 10 years;
• 2.65 % over 15 years;
• 2.90 % over 20 years;
• 3.00 % over 25 years.

In addition, the average rate of housing credits (excluding renegotiations, fees and insurance) fell to 3.13 % in April, against 3.20 % in March and 4.2 % at the start of the year. This development, qualified as “Net decline”largely explains the return of borrowers to the market.

The governor of the Banque de France, François Villeroy de Galhau, has also confirmed on France 2 that “The current context is in favor of borrowing”. He highlighted the significant difference compared to the rates practiced a few months ago.

Banks, by gradually softening their scales, thus reinject a minimum of fluidity on a market hitherto engorged by the cost of credit.

Signs of slowdown: the recovery already under tension?

This momentum remains fragile. Indeed, an increase in the average rate was observed in May, which has marked a first inflection since December 2023. Unlike the trend observed in April, this rise concerns all types of projects (new real estate, old, or works), and all durations.

If the average rate remains contained around 3.1 %, it could stabilize, or even slightly start up in the coming months. These developments point out that the current window could close faster.

The stabilization mentioned is part of a context of cautious wait -and -see among banking establishments. In early June, 87 % of the rates remained stable, while only 13 % dropped again, mainly on short durations.

In other words, the rapidly decreasing rate adjustment dynamics seem to run out of steam. This situation could encourage many candidates for purchase to accelerate their steps, for fear of seeing the financing conditions harvest again.

In parallel, the lasting tensions on the supply of goods, macroeconomic uncertainties and the evolution of the monetary policy of the ECB will continue to play a key role in the coming months.

In this context of softening the conditions of access to credit, some borrowers also envisage financing alternatives, in particular by the mobilization of capital gains from investment in crypto, the bitcoin in mind, which becomes for some a lever to constitute a contribution or secure a real estate project.

If the resumption of mortgage is undeniable thanks to the drop in rates by the ECB, it is still based on uncertain bases. The return of conditions more favorable to credit has certainly given a breath to the market, but recent signals suggest that this positive cycle could be short -lived. Between stabilization, potential regulatory adjustments and European monetary developments, the coming weeks will be decisive to find out if this alarm clock constitutes a punctual rebound … or the start of a new structural cycle.