Housing Loans : Will Rates Dip Below 3 % This Year ?

The mortgage credit market is undergoing a major shift at the beginning of 2025. After a rapid increase between 2022 and 2023, interest rates have been continuously declining for over a year, with hopes that they will fall below the symbolic 3 % mark in the coming months. This development, fueled by the slowing inflation and the eased monetary policy of the European Central Bank (ECB), is catching the attention of households and investors. However, these promising figures exist within a fragile economic context, marked by weak growth and rising financial uncertainties. It therefore becomes crucial to understand the underlying stakes and their implications for the future.

A decrease in rates driven by conjunctural factors

For the past year, mortgage rates have been continuously decreasing, which contrasts with the surge observed between 2022 and 2023, when they quadrupled in two years. In January 2025, the average rate for housing loans, over all durations, stands at 3.24 %, marking a decrease from the 3.38 % registered in the last quarter of 2024. This trend is primarily explained by the significant slowdown in inflation, as explained by Michel Mouillart, economics professor and member of the Crédit Logement/CSA observatory, who states: “the very strong slowdown in inflation has allowed the ECB to lower its key rates”.

This monetary policy, characterized by a reduction of 100 basis points in 2024, is expected to continue into 2025, with another decrease anticipated of 75 basis points. Thanks to these adjustments, banking institutions have been able to reduce their refinancing costs, which has improved credit conditions for households. However, according to projections, this decrease could halt as early as the summer of 2025, during which time rates are expected to stabilize around 2.85 %. These forecasts reflect a context where the positive effects of flexible monetary policy begin to encounter the limits imposed by a fragile economic context and tensions in the bond markets.

A forthcoming stabilization and its stakes

By summer 2025, mortgage rates are expected to stabilize around 2.85 %. They thus reconnect with the levels observed in 2014. According to Michel Mouillart, economics professor and member of the Crédit Logement/CSA observatory, “this stabilization marks the end of a downward cycle initiated by the ECB.” However, this calm could be partially alleviated by unfavorable external factors. Among these are the rising cost of French sovereign debt, now exceeding 3 %, as well as increased tensions in international bond markets.

In this context, the stabilization of rates fits into a delicate economic situation. French growth, projected to be less than 1 % in 2025, remains insufficient to offset the negative effects of rising unemployment. These fragile economic conditions are likely to impact households’ purchasing power in real estate, reducing their borrowing capacity, despite rates considered “reasonable and acceptable.” Consequently, the most modest households may see their acquisition projects compromised, which would increase disparities in the market.

Moreover, for real estate investors, this stabilization could represent a window of opportunities. Rates close to 2.85 % still offer attractive financing conditions, especially for long-term projects. However, these opportunities must be evaluated cautiously, considering the looming economic and financial risks. The uncertainties related to market tensions and a potential rise in the cost of living require rigorous anticipation to maximize benefits in this new financial environment.

This stabilization of rates opens promising prospects for borrowers and investors in the coming years. 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 enduring tensions in the financial markets. Within this framework, households and investors will have to reconcile caution and strategy, faced with borrowing conditions influenced by complex and unpredictable global dynamics.