The ECB’s decision had already been anticipated by banks, according to several mortgage brokers, thus limiting its effects. That said, if the trend continues, declines are expected “in the coming weeks” with a landing point of 3% over 20 years “during the first quarter of 2025”.
When will the chain reaction happen? The European Central Bank announced it on Thursday, September 12 a further reduction in key rates of 25 basis points. Commercial banks, which obtain liquidity from the ECB, pass on changes in monetary policy to their customers, and thus to mortgage rates.
In a domino effect, the sequence of rate hikes implemented by the ECB over the past two years to combat inflation has pushed the average rate of loans negotiated in France from 1.07% in January 2022 to a peak of 4.21% in November 2023, according to the Observatoire Crédit Logement CSA.
After an initial drop in June, they had started a slow decline. This continued easing of European monetary policy, decided on Thursday, is “very good news for borrowers”, according to broker Vousfinancer.
Bank advance
But when will it have an impact on the French who want to become owners? A priori, part of the declines has already taken place: “Many banks lowered rates in September, probably anticipating this reduction by the ECB,” explains Julie Bachet, CEO of Vousfinancer.
The ECB’s decision “had been anticipated by the markets”, confirms Pierre de Buhren, general manager of the broker Empruntis.
“Mortgage rates, which have fallen significantly in recent weeks, have already taken into account most of the effects of this announcement.”
3% in Q1 2025?
At the beginning of September, the 20-year average rate was 3.75%. Does this mean that the European decision will have no effect on buyers’ purchasing power? Not exactly. According to brokers, the decline will continue gradually.
Julie Bachet even believes that borrowers “could benefit from even more attractive rates in the coming weeks”.
If the ECB continues this policy of monetary easing, the director of Vousfinancer even foresees “rates of 3% over 20 years at the end of 2024” for the best cases and “during the first quarter of 2025” for the average rate.
For his part, Pierre de Buhren hopes to reach “an average of 3.5%, or even 3.4% over 25 years, in the most favorable scenario,” by the end of 2024.
But he is cautious, especially given the political context: “Predicting where rates will end up at the end of the year is a risky exercise in this period of budgetary uncertainty,” he warns.
Finally, according to Julie Bachet, this easing of monetary policy will allow banks “to continue their strategy of winning customers through credit while maintaining adequate margins”.