Mortgage rates in France heading towards 3%

Interest rates are continuing to fall and are trending towards 3% after a reduction in July.

Average mortgage interest rates fell to 3.62% overall (over all loan periods) in July, compared to 3.66% a month earlier, show figures from the Observatoire Crédit Logement CSA, published on August 1.

This means that rates have now fallen by almost 0.6% since the start of the year, and have returned to the level of July 2023, when they also stood at an average of 3.62%.

Read also: Interest rates for loans to buy property in France continue to fall 

Loans to a maximum of 25 years see those for 15 years are at 3.49% on average, with 25-year loan rates at 3.60%. Rates for 20-year loans have fallen to 3.50% on average. 

Mortgage broker Cafpi has released very similar figures, and on August 1 said they were seeing average rates of 3.54%. It said that the best rate offered in July was 3.18% for a 20 year loan. 

For loans with a shorter term of 10 years, Cafpi has said it is even possible to find rates under 3%.

"This is particularly the case in Hauts-de-France, where on average the rates charged over 10 years reached 2.90% in July,” it said.

Falling summer demand?

The Observatoire said that the drop in rates can be partly explained by falling summer demand.

“It is usual in July, with the arrival of the summer holidays, for demand for loans to ease,” it said in its report. “Banks also wait until September to revise their rates downwards to support the seasonal return of borrowers.” 

However, the current low is not only a result of falling summer demand. The trend has been seen since the start of the year, after interest rates averaged 4.20% in December 2023. 

This is "proof that, despite the summer break, banks are still out to win new customers and are maintaining their competitive edge”, said Cafpi.

It could also be a sign of an uptick in the market, after months of slump.

Read also: Understand the cycle beginning for property in France 

What will these new rates mean to buyers? 

The falling rates mean that buyers’ purchasing power has increased, said Cafpi. 

It cited examples including: 

• Bordeaux: 39m2 is now available for monthly repayments of €1,000 over 20 years, 3.4 m2 more than was available for the same amount in July 2023.

• Marseille: 49 m2 is now available for the same amount (up 3.3m2 from July 2023)

• Strasbourg: 46 m2 (up 3.7m2) 

• Nantes: 50 m2 (up 7m2). 

Read also: Where have property prices fallen the most in France? 

“Customers are gradually coming back to have their borrowing capacity assessed,” said Cafpi, adding that its loan applications are up 35% compared with the start of the year. 

The number of loans granted nationwide has increased by 57.1% year-on-year, for the period May-July 2024, in comparison to the same period in 2023, said the CSA Observatoire.