Mortgage lending: new loans declined in January, hampered by rising interest rates

After eight months of stability, the average interest rate for new home mortgage loans, excluding renegotiations, rose slightly at the beginning of the year to reach 3,17%, compared to 3,08% in December.

This rise in interest rates weighed on the production of new mortgage loans in January. The total amount of loans granted thus amounted to 10,9 billion euros, 800 million euros less than in December.

Despite this monthly decline, the volume of mortgage loans remains higher than that observed in January 2025, when 10 billion euros were lent, while the average interest rate reached 3,32%.

Over the whole of 2025, the total amount borrowed to finance home purchases has increased sharply, with a rise of 33%.

Moreover, the average initial term of new mortgage loans for the purchase of a primary residence is 23 years and 4 months for all borrowers, and 23 years and 10 months for first-time buyers, the Bank of France points out.

The mortgage market experienced a marked slowdown between mid-2022 and early 2024. During this period, the European Central Bank (ECB) gradually raised its key interest rates in order to combat inflation in Europe.

These increases were then passed on to mortgage rates, which reached a peak of 4,17% in early 2024.

In this context, the Crédit Logement/CSA Observatory estimated in January that the cost of a mortgage to buy a home should increase again this year and next year, due to an uncertain economic environment and banks seeking to preserve their margins.

French banking institutions remain dependent on France's borrowing rate, since they partly finance themselves on the markets at a cost close to that at which they then lend to individuals and businesses.

However, the cost of French debt reached historically high levels at the end of 2025, levels not seen for almost fifteen years.

Illustrative image of the article via Depositphotos.com.