Mortgage interest rates fell sharply in November, below 3,4%

"We will soon publish the figures for the rates for the month of November: on average, real estate loans, which were at more than 4% a year ago, in January 2024, in November fell on average below 3,4%." "It's a sharp drop," he said during an interview on France 2.

"Moreover, the French are starting to borrow again. This is good news for a gradual recovery in the real estate sector," added the governor.

In presenting his wishes on Wednesday, the governor of the Bank of France also predicted that the European Central Bank (ECB) could lower its rates to a level close to 2% "by next summer" thanks to the decline in inflation. A key element for French banks to reduce their rates even further.

So far, although the ECB has since June reduced its main policy rate from 4% to 3%, mortgage rates have barely slowed, falling from 3,56% in September to 3,51% in October, according to the Banque de France. This is still well above the level of the first quarter of 2022, when the average rate was 1,80%.

These rates are exclusive of fees and insurance. In the 3rd quarter of 2024, all fees included, borrowing rates over 20 years and more still stood at 4,39%.

The drop in borrowing rates should give a boost to real estate loans, the total amount of which has already risen above the 10 billion euro mark in October, to 10,4 billion, in a market in poor shape. The Banque de France has pointed to a "recovery trend since the low point of March 2024".

The total amount of new mortgage loans had only exceeded the symbolic €10 billion mark once this year, in July. At the current rate, 2024 is likely to be the weakest year in ten years, with economic and political uncertainties having caused a wave of wait-and-see attitude among buyers, whether first-time buyers, second-time buyers or investors.

Illustrative image of the article via Depositphotos.com.