Bank Of France Confirms Mortgage Rate Decline

The real estate credit market in France is experiencing a genuine turning point. After a period marked by high interest rates, which hindered access to property, the trend is reversing. François Villeroy de Galhau, governor of the Banque de France, announced that mortgage rates fell below 3.4 % in November 2024, compared to 4 % in January. Such a decrease is explained by a slowdown in inflation, which is expected to reach 1.5 % in 2025 after weighing on the economy in recent years. This development provides relief for borrowers, but its implications go beyond the simple framework of real estate. A decrease in the cost of credit generally encourages economic recovery, restoring purchasing power to households and encouraging them to invest. This dynamic could also affect other asset classes, including cryptocurrencies. A more stable economy and smoother access to financing prompt some investors to rethink their strategies. With this drop in rates and the anticipation of a possible monetary easing by the European Central Bank (ECB), the real estate market could regain a more favorable dynamic.

Declining mortgage rates, a breath of fresh air for borrowers

The decline in inflation plays a central role in the decrease in mortgage interest rates. François Villeroy de Galhau, governor of the Banque de France, highlighted this link. Indeed, he stated that: “inflation, which was the acute illness of the French economy, is on the road to recovery.” According to him, this stabilization provides a breath of fresh air to households, whose purchasing power had been hurt by rising prices and the increasing cost of credit in recent years.

With an average rate below 3.4 % in November 2024, the real estate market is beginning to turn around after a period of sharp increase that reached 4 % in January. For several months, restrictive financing conditions had hindered access to property. Such a situation contributed to the reduction in transaction volumes, which weighed on the entire sector. This inflection therefore constitutes a positive signal for borrowers, but also for real estate professionals, who hope for a gradual recovery in purchases.

Moreover, this easing of rates is also explained by the monetary outlook of the European Central Bank (ECB). Thus, the institution might lower its key rates to 2 % by summer 2025, which would encourage banks to further reduce the cost of credit. “The French are starting to borrow again. This is good news for a gradual recovery of real estate,” pointed out François Villeroy de Galhau. Such a monetary easing, combined with more controlled inflation, suggests the end of the restrictive cycle that had hindered investment and weighed on consumption. From now on, economic actors are watching the evolution of rates with the hope that this dynamic continues and sustainably supports economic activity.

What impact on investment strategies ?

The decrease in interest rates goes beyond the real estate market. It could also alter investors’ trade-offs, particularly concerning riskier financial assets. In periods of high rates, capital generally flows towards secure investments, such as government bonds or savings accounts, at the expense of more volatile markets like bitcoin and decentralized finance (DeFi). Thus, the current environment, marked by easing rates and a decline in inflation, offers investors more leeway, who may be tempted to redirect a portion of their liquidity towards more dynamic asset classes.

The monetary outlook of the European Central Bank (ECB) constitutes another key element in this restructuring of investment strategies. If the ECB lowers its key rates to 2 % by summer 2025, as François Villeroy de Galhau anticipates, banks will have better conditions to finance the economy, leading to increased liquidity in the markets. Such easing would encourage investors to take greater risks, particularly in alternative assets like cryptocurrencies. After suffering from the monetary tightening of the ECB and the Fed in 2022-2023, these assets could regain strategic appeal, especially among institutional investors who had gradually moved away from this sector in favor of more traditional investments.

If this dynamic is confirmed, crypto could thus benefit indirectly from monetary policy, with a resurgence of interest both in financial markets and among savers seeking diversification. However, this evolution will heavily depend on the evolution of rates and the ability of markets to incorporate these new parameters without causing renewed volatility.

The announced monetary easing could revive real estate investment and rejuvenate financial markets, but its impact on cryptocurrencies remains uncertain. If the rate decline encourages a return to riskier assets, its effect will depend on the European economic policy, inflation trends, and the level of investor confidence. A reduction in ECB rates to 2 % could redirect a portion of capital towards cryptocurrencies, particularly among institutional investors, but caution remains advisable. In a market seeking stability, the coming months will determine whether this trend marks a temporary adjustment or the beginning of a new cycle for alternative investments.