IMMONEWS #1 - 10 February 2025

1. Mortgage interest rate trends

In February 2025, mortgage interest rates continue their downward trend that began at the end of last year. The best borrower profiles can now secure financing at around 2.70% over 20 years, a notable decrease compared to previous months.

This trend is mainly explained by the recent decision of the European Central Bank to cut its key interest rates by 0.25%, in order to stimulate the European economy and promote access to credit. This monetary easing triggered a positive response from French banks, which are gradually adjusting their rate schedules. Banks are indeed seeking to attract a wider clientele after a year in 2024 marked by a sharp decline in mortgage lending.

However, the conditions for accessing credit remain demanding. Banks still favour borrowers with strong profiles, with substantial personal contributions and controlled debt levels. For first-time buyers, this drop in rates represents an opportunity, but the requirements in terms of residual income and job stability continue to limit access to financing.

The question now is whether this downward trend will continue in the coming months. Some analysts believe that there is limited room for further decreases, while others expect further moderate reductions if inflation continues to slow down.

2. Property regulations and legislation

The 2025 budget, adopted through the use of Article 49.3, introduces several measures with a direct impact on the housing sector. Among the major decisions, the extension of the Zero-Interest Loan (PTZ) for new builds across the entire territory stands out, thereby facilitating home ownership for a greater number of households.

Until now, the PTZ was primarily reserved for high-demand areas. Its expansion will allow buyers in rural and suburban areas to benefit from this financial tool. However, uncertainties remain about the actual effects of this measure, particularly due to the eligibility conditions which remain strict.

Furthermore, an additional allocation of 100 million euros has been granted to local authorities to support the construction of new housing. This measure aims to address the supply crisis affecting many municipalities, where demand far exceeds the number of available properties.

On the other hand, the 2025 budget does not provide new solutions regarding the shortage of intermediate housing or the student housing crisis, which remains a major concern.

3. Real estate market dynamics

After a year in 2024 marked by a significant correction, the real estate market is showing signs of stabilisation. Prices are slowing their decline and, in some areas, a recovery is even being observed.

The combination of several factors explains this trend. First, the easing of interest rates is restoring purchasing power to buyers, which supports demand. Second, sellers are beginning to adjust their prices to market reality, thereby facilitating transactions.

In major cities such as Paris, Lyon and Bordeaux, the price correction that began in 2023 appears to be reaching a low point. Buyers are gradually returning, particularly buy-to-let investors, who had deserted the market in the face of rising rates and regulatory constraints.

Conversely, in rural areas and certain mid-sized cities, the trend is more mixed. Supply remains abundant and demand less robust, which is slowing the recovery of transactions.

4. A record-breaking January for the property market

The property market experienced a particularly favourable momentum in January, marking its best start to the year in five years.

This trend is explained by a recovery in transactions, driven by several factors: the drop in interest rates, relative price stabilisation, and an increased willingness of buyers to move forward with their projects after a year in 2024 marked by a wait-and-see attitude.

The property professionals' barometer shows that sales volumes surged at the start of the year, particularly in the primary residence segment. Many buyers took advantage of price adjustments to position themselves before a potential market upturn.

Furthermore, buy-to-let investment is regaining some momentum, despite a less favourable tax framework. The expiry of the Pinel scheme on 31 December 2024 prompted some investors to finalise their projects before the deadline, generating an increase in transactions in this segment.

However, some experts believe that this improvement could be temporary and that it will be necessary to wait until the end of the first quarter to confirm a genuine market recovery.

5. Outlook and analysis

The recovery that began at the start of the year is expected to continue in the coming months, but with variations depending on the market segment.

On the buyers' side, the mood is optimistic, particularly thanks to the drop in rates and price adjustments. First-time buyers are benefiting from a more favourable environment than in 2023, although lending conditions remain demanding.

Conversely, sellers still need to adapt to a new reality: negotiation margins are greater than before, and selling times remain longer than during periods of strong growth.

Regarding the rental market, professionals are concerned about the impact of regulations on energy-inefficient properties. With the ban on letting properties rated G coming into effect on 1 January 2025, many landlords are forced to carry out renovations or sell their properties, which could affect the rental supply in certain areas.

In a context where supply and demand are seeking a new balance, 2025 is shaping up to be a transitional year for real estate. The coming months will be decisive in confirming whether the stabilisation observed in January translates into a genuine and lasting recovery.