Real estate loan: all the information to borrow in January 2025
The year is starting off auspiciously with rates still falling and property prices also falling. Borrowing conditions are therefore improving, as evidenced by the decline in new usury rates over the most common repayment periods. Rates, granting rules, bank competition, borrower insurance, here is everything you need to know to finance your real estate project in January 2025. Situation of real estate loan rates in January 2025 This is the good news at the start of year: borrowing rates continue to contract. The slow decline has been taking place for 12 consecutive months, linked to the monetary policy of the European Central Bank which has lowered its key rates 4 times since last July to support the economy in the euro zone, the inflationary drift having now been curbed. The cost of credit in France is therefore lower than a month ago, let alone a year ago. Average rates over 20 years have in fact fallen from 4.30% to 3.30% currently, a very clear decline of 100 basis points. Here are the average market rates offered by banks in January 2025: Over 15 years: between 3.10% and 3.35% Over 20 years: between 3.25% and 3.45% Over 25 years: between 3.35 % and 3.50% Premium profiles can obtain significant discounts and even claim a rate below 3% if all the arguments are met. The rate granted by the bank depends on the personalized analysis of the file (income level, personal contribution, precautionary savings, professional stability, absence of current loans, absence of bank overdraft). New usury rates for the first quarter of 2025 Like every quarter, the Banque de France publishes the usury rates applicable depending on the type of credit and duration. The usury rates are calculated on the average of the APR (Annual Percentage Rate) granted by the banks the previous quarter, and increased by a third. Type of real estate loan Average APR practiced in Q4 2024 Usury rate applicable in Q1 2025 Fixed rate loans with a duration of less than 10 years 3.46% 4.61% Fixed rate loans with a duration between 10 and less than 20 years 4.35% 5.80% Fixed rate loans with a duration of 20 years or more 4.25% 5.67 % Variable rate loans 4.40% 5.87% Bridge loans 4.98% 6.64% For this first quarter of 2025, we see that usury rates are decreasing over terms equal to or greater than 10 years, sign of an easing of borrowing rates during previous months. As a reminder, the usury rate is the legal rate that banks must not exceed when granting credit. It sets the maximum authorized APR, the APR being the indicator of the final cost of a real estate loan, because it aggregates all the costs linked to obtaining bank financing (application fees, guarantee, borrower insurance premiums). Interbank competition Even if the period is more of a wait-and-see attitude given the political chaos in France since the dissolution of the National Assembly last June and the difficulties in forming a lasting government, all the lights are green to embark on a real estate project. Real estate prices fell in 2024 in the face of falling demand, but the phenomenon is drying up due to more attractive borrowing rates which encourage taking action. To draw a line under the real estate crisis that the country has suffered over the last 2 years, banks are being proactive and more aggressive in attracting customers. Some do not hesitate to follow up with customers whom they had refused months or weeks previously. This is particularly the case for first-time buyers, with little personal contribution, who can now more calmly consider the realization of their real estate project. Still on the first-time homeownership segment, we are awaiting confirmation from the new government of the extension of the PTZ to the entire territory and to individual homes. Also consider thermal strainers. These properties classified F or G on the DPE (Energy Performance Diagnosis) scale benefit from a substantial discount of up to 20%. Many landlords are looking to get rid of them because they cannot renovate at great expense to comply with regulations. In recent days, certain banks have been granting buyers of energy-intensive housing reduced borrowing rates on condition that they carry out work to improve the label. Standard for granting real estate loans In 2021, the High Financial Stability Council (HCSF) wanted to better regulate the distribution of real estate loans by establishing granting rules that are binding on banks: The debt rate is capped at 35% of net income before tax, loan insurance included. The maximum repayment period must not exceed 25 years, except for an exemption up to 27 years for a purchase of new property off-plan (Sale in the Future State of Completion) or in new property with renovation work including the envelope reaches at least 10% of the transaction amount. Banks may deviate from this standard for first-time buyers and the acquisition of a primary residence. If you are buying for the first time, assert your rights. Provided that your financial stability will not be jeopardized, the bank can grant you an extraordinary loan. Savings lever with borrower insurance It is important to obtain the lowest interest rate, but choosing the right loan insurance is more effective than negotiating your borrowing rate to reduce the cost of your credit. A good rate is not everything, because the cost of your loan is increased by other mandatory costs including borrower insurance. The regulations allow you to freely choose your insurance contract. Take this opportunity to optimize the cost of your home loan. By comparing online offers, you will see that bank insurance is up to 4 times more expensive than alternative offers, with equivalent guarantees. For a property loan of €200,000 over 20 years, going from a rate of 3.35% to 3.25% saves you €2,441 over the total term, or a gain of €11 per month . If you are over 40 years old, you can guarantee this loan with delegated insurance at the competitive rate of 0.16% (average rate with the Magnolia.fr broker for this type of profile), compared to 0.36% on average. for bank insurance. The difference is significant: Insurance rate Monthly insurance cost Total insurance cost Bank insurance 0.36% €60 €14,400 Delegated insurance 0.16% €27 €6,400 Savings €33 €8,000 The negotiation of insurance is largely more profitable than that of the 10 points severely cut on the interest rate. The 2 approaches must be carried out jointly to optimize the cost of your credit, while being accompanied by an insurance and credit broker.
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