Trends in Interest Rates

For the past year, mortgage rates have been steadily declining, gradually restoring borrowers’ purchasing power. However, at the beginning of 2025, a stabilization trend seems to be taking hold. Broker Cafpi’s analysis.

According to Cafpi, this stabilization of rates can be explained by “an uncertain political climate, with the national budget still under discussion, but also by tensions in the financial markets. Nevertheless, market indicators remain positive overall, with sustained demand and banks continuing to offer attractive rates for the best profiles” .

January a favorable month for borrowers

The actual rates charged in January 2025 continued to fall compared with the previous month. Cafpi, the leading broker on the French market, negotiated average rates of 3.17% for 15 years, 3.24% for 20 years and 3.32% for 25 years, a drop of between 7 and 8 hundredths depending on the term. Some cases with optimal profiles have even been able to obtain rates of 3.00% over 25 years.

This trend illustrates the significant decline in rates in one year: in January 2024, they stood at 3.95% over 15 years, 4.10% over 20 years and 4.27% over 25 years. For borrowers, this has resulted in significant gains in purchasing power, particularly in certain regions where the combined fall in interest rates and property prices has made it possible to increase the area that can be purchased.

Rates starting to stabilize

“Although competition between banks remains, some players who had lowered their rates more aggressively in recent months have chosen to raise them slightly to align themselves with their competitors. At the same time, other banks maintained their rate cuts in February, especially for borrowers with profiles deemed to be the most secure,” the broker notes.

At the beginning of the month, the average rates negotiated by Cafpi are still falling, but more moderately:

• 2.75% over 10 years
• 2.85% over 15 years
• 3.00% over 20 years
• 3.05% over 25 years

If a budget compromise is reached between the government and parliament, a new phase of rate reductions could emerge in the coming weeks.

Increasing real estate purchasing power

The combination of lower interest rates and a correction in property prices has significantly improved the purchasing power of households in recent months. Taking the example of a loan with a monthly payment of €1,000 over 25 years, the change is spectacular:

• Reims: +18.73 m² in one year
• Lille: +10.96 m²
• Nantes: +9.65 m²
• Strasbourg: +6.87 m²
• Paris: +2.55 m²

These gains in surface area allow borrowers to aim for larger or better-located properties than a year ago.

Notable regional disparities

While the general trend shows a homogenization of rates over 10 years (3.00% throughout France), the differences are widening over longer periods. In Île-de-France, for example, the most attractive rates over 15 years reach 3.01%, while they rise to 3.47% in Provence-Alpes-Côte d’Azur.

Conversely, the latter region offers the lowest rate over 20 years (3.14%), while Auvergne-Rhône-Alpes and Hauts-de-France have the least favorable conditions over this period with rates of 3.39% and 3.46% respectively.

Outlook: recovery still fragile

The European Central Bank’s (ECB) monetary policy continues to play a crucial role in the evolution of interest rates. The 0.25% cut decided on January 30, 2025, combined with inflation contained at 1.3% in December 2024, should help stabilize the market. However, French budgetary uncertainty remains a factor of fragility.