Mortgage rates will continue to rise

Borrowing money to buy a home will cost more this year and next year, says the Crédit Logement/CSA Observatory on Tuesday, January 20, as a consequence of the uncertain economic context and banking players protecting their margins.

"We are in the midst of two years, both current and upcoming, which are years of rising interest rates on loans," said Michel Mouillart, professor of economics in charge of presenting this study, during an online press conference.

The Crédit Logement/CSA Observatory measured an average credit rate of 3,17% in December 2025 (excluding insurance and ancillary costs), after a low point last year of 3,06%, reached in June and August.

This rate excludes insurance and additional costs, such as broker fees.

Including all fees, the average rate charged in the fourth quarter of 2025 reached 3,85% for a term of twenty years and more, according to the latest available data from the Bank of France, i.e. about 43.500 euros of interest for each tranche of 100.000 euros borrowed over 20 years.

The increase that began in the fall of 2025 reflects "the economic reality that is imposed on credit institutions", and which "has led them to (...) readjust the costs of credit (and) increase borrowing rates", Mr. Mouillart described.

French banks are dependent on their country's borrowing rate, since they borrow on the markets at a similar cost a portion of the money that 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.

Lifetime credit

The "relative deterioration of the economic environment" will accelerate this phenomenon in the coming months, predicts Mr. Mouillart, with an expected rate of 3,55% in the fourth quarter of 2026 (compared to an annual average of 3,41%) and 3,95% in the fourth quarter of 2027 (compared to an annual average of 3,60%).

"I really believe that this is the right time to borrow because what we have been observing for several months is that the significant drop in mortgage rates has stopped," warned François Villeroy de Galhau, Governor of the Bank of France, on France Inter in early January.

As a consequence of pressure on real estate purchasing power, the average duration of real estate loans is approaching 21 years, a long duration never recorded by the Observatory since its creation almost twenty years ago.

This period (250 months precisely) is now approaching the maximum limit allowed by the Bank of France and the Ministry of Economy, set at 25 years.

If the rise in property prices - measured at +0,8% last year according to the latest data from Fnaim, published last week - continues, two consequences are to be expected, according to Mr. Mouillart.

Either the share of monthly payments in borrowers' income will increase, or "the other possibility, which is to be feared, is the reduction" in the number of borrowers.

"The credit market remains difficult to access for a large part of households," wrote the Fnaim last Wednesday, noting that "access to financing (...) is mainly reserved for the wealthiest households."

Illustrative image of the article via Depositphotos.com.