A little over a month after its last announcement, the European Central Bank (ECB) has just confirmed a further cut in its key interest rates. Is this seventh consecutive cut in less than a year a sign of good news for borrowers? We take stock.
For Pierre Chapon, co-founder of the Pretto Group: "This latest ECB rate cut is an encouraging signal for the real estate sector, even if its impact on mortgage rates is not yet certain. If we follow the current downward trend, this remains the most likely scenario."
Snowball effect of declines?
-0,25 points is the drop announced by the ECB on its deposit rate, dropping from 2,50% to 2,25%. This rate corresponds to the cost for commercial banks that deposit their money with the ECB.
Why did the Frankfurt institution make this decision? In a rather tense economic and geopolitical context, growth prospects are not the most encouraging, so stimulating the European economy in the face of international tensions is essential.
Falling inflation also plays a role. In March 2025, it stood at 2,2%, close to the ECB's 2% target.
Market uncertainty in the background
This rate cut comes amid a rather delicate international context, with the trade war launched by Donald Trump in early April. It's worth noting that the Oval Office resident imposed 10% tariffs on all his trading partners (except Russia), in addition to surcharges of up to 145% for China and 20% for Europe. These increases have been put on hold for 90 days, pending negotiations.
On the financial markets side, uncertainty and doubt are the watchwords. And in this kind of environment, banks remain rather cautious. This is also why mortgage rates rose slightly in early April.
What impact on mortgage rates?
Lower key interest rates are generally good news for borrowers, but this doesn't mean that rates will drop immediately. This is because the transmission isn't automatic.
Banks will first pay attention to how bond rates (the interest rate at which the government borrows money on the financial markets, such as 10-year OATs) will evolve. These bond rates are a benchmark for banks when setting lending rates.
And then? They will decide whether to adjust their scales according to their business strategy.
For Pierre Chapon, co-founder of the Pretto Group: "At Pretto, we believe the downward trend in mortgage rates will continue. Barring any rebound, the decline should continue until the summer before stabilizing around 2,6-2,8% (even 2,5% for the best profiles)."
What should a loan applicant do?
Lower rates don't necessarily mean you have to wait. While rates are likely to decline, this isn't a mechanical effect. The most important factor is actually building a solid application, as the most advantageous rates are generally more accessible to the best profiles.
This involves having a down payment of at least 10% of the price of the property in question, a stable income, and, above all, a debt ratio that does not exceed 35%. This is the key to putting banks in competition and receiving attractive offers.
Illustrative image of the article via Depositphotos.com.
