The European Central Bank (ECB) recently stopped a series of declines in its interest rates. This Thursday, July 24, 2025, marks the first time in twelve months that the ECB does not make a new reduction, in response to the slowdown in inflation in the euro zone. The deposit rate is now stabilized at 2%, after reaching 4% during a high inflation period. ECB’s decisions are repercussions directly on the rates of real estate credits, since banks refinance with it.
What changes on the real estate market?
In France, even if the drop in guiding rates of the ECB has had its small effect, real estate credits remain rather stable, or even have slight increases. In mid-July 2025, the average rate of a loan was 3.07%, almost the same as the 3.09% recorded four months earlier. Since June, these rates have not changed after having decreased from a point, going from a peak of more than 4% at the end of 2023 until spring 2025, illustrating the stability of interest rates. In July, there were average rates of 3.15% for 20 years and 3.25% for 25 years. These figures correspond to the average of the last 25 years, except the special period between 2019 and 2021, where rates evolved between 0% and 1%. We can even find for the most qualified borrowers of the rates below 3%.
The factors that vary the rates
The bonds that can be assimilated to the Treasury (OAT) play an important role in setting the rates practiced by banks. Since the fall of 2023, they have been between 3.2% and 3.5%, a level that we had not seen since 2011, partly due to the adjustments of the key rates by the ECB. To obtain a loan at a rate of 3%, the OAT should fall to 2.5% or less, according to an expert in the financial sector. At the beginning of July, the OAT rate at ten years was 3.24%, before going up slightly to 3.35% on July 24.
Competition between banks also participated in the rare drops observed in 2025. This competition first intensified and then returned to a more normal pace.
What is happening on the economy and politics side
The economic and political situation also exercises its influence on the evolution of mortgage borrowing rates. The threats of customs duties launched by Donald Trump, as well as various international conflicts and political instability in France are among the elements that tip the balance in an uncertain economic context. In addition, French public accounts provide a deficit of 4.6% in 2026, which may make the borrowing conditions more difficult.
The budget for next year is currently in preparation at Matignon and Bercy; However, it could be rejected by the National Assembly, which would perhaps lead to a fall in the government and a loss of confidence in the financial markets.
What to expect later?
The forecasts for next year suggest a possible rise in the rates of real estate credits in France. A teacher of economics anticipates a return to an average rate of 3.4% by the end of 2026. For his part, Michel Mouillart provides an average annual rate of 3.11% for 2025, with a small drop to 3.05% to the end of the year before a possible increase, due to a tense political-economic environment.
