Evolution of mortgage rates in 2019

As can be seen in this article on the 2019 year-end review, the property market made significant progress in terms of volume and prices. The previous year, the 1 million transaction threshold was finally crossed in France. A historic record that may mark the beginning of a new era for the market. However, this remarkable increase can be explained by a simple observation: the evolution of borrowing rates for the purchase of flats or houses increasingly favours the purchase of property in France.

Record rates

Since the peak in 2008 at 5%, mortgage interest rates have done nothing but fall. Between 2012 and 2018, average rates fell from 3.21% to 1.45%. This remarkable decline is largely due to an accommodative policy from the ECB and competition between banks.

In 2019, this downward trend continued, with the average rate reaching 1.2%. This average depends on the bank and the loan in question. As indicated in the table below, 15-year rates fell below 1% in 2019, hover around 1.15% for 20 years and reach 1.37% for 25 years. This record level represents a genuine windfall for anyone looking to buy property.

These rates offer particularly interesting opportunities for young professionals. Meilleurtaux President Hervé Hatt stated: : “Two-thirds of our clients are under 40, also well helped by banks’ flexibility on deposits.” This is good news for the market in general, with a younger demand becoming more dynamic with more transactions and rising prices, especially in major cities.

A very slight rise, but nothing to worry about

However, December 2019 broke with the previous months, as it saw a slight rise in rates. This rise remains very minor as it represents an increase of only 0.05% across all rates.

Thus, rates went from 1.10% to 1.15% for 15 years, from 1.25% to 1.33% for 20 years and from 1.50% to 1.56% for 25 years. This increase is nothing alarming and can be justified by logical explanations. Indeed, experts note several factors to consider. On the one hand, in December, most banks have already reached their targets, and the pressure to attract new customers eases. On the other hand, during the festive period, synonymous with holidays, banks have reduced staff and a short-term rise in rates, unfavourable to borrowers, can avoid opening new files.

And for 2020?

With the counters reset on 1st January, 2020 looks equally interesting in terms of interest rates. Indeed, nothing currently signals a rise and the property climate remains fairly stable. Rates may not fall as much as in 2019, but a moderate decline can probably be anticipated.