Mortgage loans more expensive in February

The average interest rate on mortgage loans in France increased over a month in February, according to figures published Tuesday, April 7 by the Bank of France, but without affecting the total amount lent by banks.

In detail, the average interest rate for new home loans excluding renegotiations was 3,23% in February, compared to 3,17% in January.

"The same trend is also observed among our European neighbors," the Bank of France points out.

This rate excludes additional costs, such as borrower's insurance or broker's service fees, for example.

Including all fees, the interest rate was 3,89% in the first quarter, or about 44.000 euros of interest for each tranche of 100.000 euros borrowed over 20 years.

This rise in borrowing rates, visible since December, has not deterred buyers: the total amount borrowed actually increased over a month in February, to 11,6 billion euros, compared to 10,9 billion euros in January.

Real estate professionals remain on tenterhooks each month following the rates set by banks, and fear a more pronounced rise in rates in the coming months because of the war in Iran.

The Israeli-American attacks against Iran since the end of February have indeed put pressure on interest rates on the sovereign debt of many countries, including France.

The rate of French debt maturing in ten years thus approached 3,90% on March 27, whereas it was around 3,20% at the end of February.

Banking institutions are dependent on their country's borrowing rates, since they borrow on the markets, under similar conditions, part of the money they then lend to individuals and businesses.

"The resurgence of geopolitical tensions in the Middle East since the end of February poses an inflationary risk that could reshuffle the cards" in the real estate market, Cafpi brokers warned last week in a note.

Illustrative image of the article via Depositphotos.com.