Mortgage interest rates continue to fall. Started at the start of 2024, the decline was confirmed in March.
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That’s it, the 4% mark has been crossed downwards. The average rate for real estate loans (excluding insurance), which was still 4.24% in December, fell to 3.94% in March, according to the Banque de France. After two years of strong growth, the decline has been well established, month after month, since January 2024. A decline that is still limited for the moment, but which allows households who want – and can – to invest in real estate to begin to hope for.
The amount of credits granted decreasing
This decline in rates over the past three or four months has not yet been reflected in the granting of credit by banks. So much so that the overall amount of new housing loans has also fallen. The overall amount of new borrowings is down: 6.7 billion euros. This is a ten-year low. We were still at 7.4 billion in February. The movement is paradoxical to say the least because, when rates fall, there should be more credits in circulation. Well no. Always not.
Households, or individuals, remain cautious. We don’t jostle at the gate. Especially since, even if they have been sending some positive signals in recent weeks, the banks are far from having truly reopened the credit tap. Many of them still brake when a household knocks on their door. Everyone remains cautious because real estate prices are still very high. Despite the very real start of the drop in rates, the real estate item continues to weigh heavily on the purchasing power of the French. There is not yet a good balance between falling rates and the purchase price of housing, not yet a balance between supply and demand.
Other blocking factors
Rates are now at 3.9%, but that’s excluding insurance. If we add insurance and fees, the level remains at 4.79% over twenty years or more. Professionals also point to certain rules imposed by the High Financial Stability Council which constrain, in particular, rental investment. So the sky is clearing in the area of credit and the outlook is positive, without necessarily triggering a loan, it’s time to discuss with your banker the opportune moment which is sure to arrive… finally.