Real estate loan: should you borrow quickly to take advantage of the fall in rates before they rise?

Real estate loan rates have continued to fall since the start of the year, and have been at their lowest since June 2023. Should borrowers take advantage of this favorable situation to take out a real estate loan? Elements of response.

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They never stop falling. For the tenth consecutive month, mortgage rates continued to fall in November. They now reach an average of 3.42% for loans spread over 20 years, according to the broker Cafpi, a drop of 0.12 points over one month. For comparison, credit rates still reached 4.3% at the start of 2024. This spectacular drop in rates is mainly explained by the decisions of the European Central Bank (ECB) to lower its key rates to three repeated in recent months. So, is now really the right time to take out a mortgage?The period seems to be a good window for borrowing with attractive rates and stabilized property prices.», rejoices Caroline Arnould, general director of Cafpi.

“The banks have reopened the credit tap, they are in the process of winning over new customers, they are refusing few applications and are lending much more than at the start of the year. It’s a good time to borrow», Adds Sandrine Alonnier, spokesperson for the broker VousFinancer. The minimum personal contribution required by banks is also falling, which allows young first-time buyers to borrow more easily. While up to 25% of the price of the property was requested in 2023, today, banks accept more modest contributions, often around 10 to 15% of the purchase price. “In the provinces, it is now possible to borrow without down payment, provided you have precautionary savings. This was completely unimaginable just a few months ago. All the lights are green for borrowers», continues Sandrine Allonier.

Growing real estate purchasing power

In addition, households have seen their real estate purchasing power, that is to say the average surface area that they can acquire with a monthly payment of 1,000 euros, increase over the past year with the fall in rates. Combined with the decline in real estate prices, the drop in rates has, for example, allowed borrowers to acquire an additional room in October 2024 (10.81 square meters gained) in Nantes, compared to October 2023. The gain in power property purchase over one year is also particularly spectacular in Toulouse (+8.5 square meters), Strasbourg (+7.56 square meters) and even in Lille (+6 square meters).

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It remains to be seen whether credit rates will continue to fall in the coming months. This will partly depend on the European Central Bank, which will decide at the next meeting of governors scheduled for December 12, whether or not to lower its key rates once again. The Governor of the Bank of France François Villeroy de Galhau suggested on Wednesday November 13 on France Inter radio that this possibility could not be ruled out. In any case, even if credit rates could continue to fall at the beginning of 2025, it can be particularly advantageous to start a real estate project now. Households who begin the purchasing process today will be able to benefit from a possible rate reduction in the coming weeks, while their application is accepted.

Also note that the transfer rights for valuable consideration (DMTO), incorrectly called “notary fees” to the extent that they are essentially made up of local taxes, will increase from next year, for a period of three years. The Prime Minister announced, Friday, November 15, that the finance bill for 2025 (PLF) will give, to departments that wish it, the possibility ofincrease DMTO by 0.5 points. Taking out a property loan in the coming weeks allows you to avoid this increase in notary fees, which could amount to 1,500 euros for a purchase of 300,000 euros according to the broker Vous Financer.