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, they anticipate declines “in the coming weeks” with a landing point of 3% over 20 years “in the first quarter of 2025”.
When will the chain reaction start? The European Central Bank announced on Thursday, September 12 a new drop in its key rates by 25 basis points. Commercial banks, which obtain liquidity from the ECB, pass on changes in monetary policy to their customers, and therefore to mortgage rates.
Through a domino effect, the sequence of rate increases carried out by the ECB over the last two years to combat inflation has propelled the average rate of credits negotiated in France from 1.07% in January 2022 to a peak of 4.21% in November 2023, according to the Crédit Logement CSA Observatory.
After an initial drop in June, they had started a slow decline This continued loosening of European monetary policy, decided this Thursday, is “very good news for borrowers”, according to the broker Vousfinancer.
Banks’ anticipation
But when will it be passed on to French people who want to become homeowners? A priori, some of the reductions has already taken place: “Many banks lowered their rates in September, probably anticipating this reduction by the ECB,” explains Julie Bachet, general director of Vousfinancer.
The ECB’s decision “had been anticipated by the markets,” confirms Pierre de Buhren, CEO of the broker Empruntis.
“Mortgage rates, which have fallen significantly in recent weeks, have already included most of the effects of this announcement.”
3% in the first quarter of 2025?
At the beginning of September, the average rate over 20 years was in fact 3.75%. Does this mean that the European decision will have no effect on the purchasing power of buyers? Not exactly. According to brokers, the decline will continue gradually.
Julie Bachet even believes that borrowers “will be able to benefit from even more attractive rates in the coming weeks.”
If the ECB continues this policy of monetary easing, the director of Vousfinancer even anticipates “rates of 3% over 20 years at the end of 2024” for the best files 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, particularly given the political context: “Predicting the landing point of rates at the end of the year is a risky exercise in this uncertain budgetary period,” 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 suitable margins”.