After sharp increases in recent years, mortgage rates are expected to drop significantly in 2025. Experts share their predictions, indicating when we will fall back below 3%.
Real estate loan rates have changed significantly in recent years. After reaching peaks in 2023, sometimes exceeding 4%, they began a gradual descent. In January 2025, the average rate for home loans is 3.24%, good news for borrowers who had seen their purchase plans put on hold in the face of soaring rates. This decline is linked to better control of inflation and the decisions of the European Central Bank (ECB), which has gradually reduced its key rates. According to several experts, this trend is expected to continue for a few more months.
Michel Mouillart, professor of economics and member of the Crédit Logement/CSA Observatory, announces that inflation should continue to fall throughout 2025, reaching 1.7% at the end of the year. The ECB, in reaction to this drop, should therefore continue to reduce its rates, which will have a positive influence on property loan rates. Thus, rates could fall below 3% before summer, offering borrowers a new window of opportunity to finance their real estate projects.
However, according to Michel Mouillart’s forecasts, this drop in mortgage rates should not last indefinitely. He predicts that the reduction in rates will stop around 2.85% in the summer of 2025, and that they will stabilize at this level for the following years. This rate, close to 2014 levels, remains attractive for buyers, although some were hoping for a more spectacular fall.
Some analysts, such as Caroline Arnould, managing director of the broker Cafpi, share this perspective, while being even more optimistic. According to her, the average rate could reach 2.5% by the end of the year. This forecast is based on the hypothesis that competition between banks will remain as strong as in recent months, which would push financial institutions to offer even more advantageous conditions to attract borrowers. But this trend could be thwarted by political factors, notably the instability linked to the current government situation.
If these forecasts come true, the coming months could therefore be decisive for households wishing to renegotiate their property loan or invest in property. With lending rates falling and property prices falling in some areas, now could be an ideal time to make an acquisition. However, these opportunities will not be accessible to everyone. The best rates will be reserved for borrowers with solid records, while others will have to settle for slightly higher rates.
The situation therefore remains favorable for some buyers, but political and economic uncertainty could still influence these dynamics. The coming months will be crucial for observing the evolution of rates and the attitude of banks to a changing market.