Mortgage Loans: The Symbolic 3% Threshold Has Been Crossed
Following the interest rate hikes announced on March 16 by the European Central Bank, the average mortgage loan rate continues to rise and has now exceeded the symbolic 3% threshold, regardless of loan duration.
For longer maturities, rates now surpass 3.5%, significantly impacting borrowers’ purchasing power and high-end real estate financing strategies, both in Paris and internationally.
A steady rise in mortgage rates since 2022
Since early 2022, mortgage interest rates have been increasing steadily. This trend, combined with high inflation, has reduced borrowing capacity and led to a noticeable decline in mortgage loan production.
To mitigate this slowdown, authorities introduced a monthly revision of the usury rate during the first half of 2023. While helpful, this measure has not been sufficient to fully restore access to mortgage credit.
Strict mortgage lending regulations in France
Mortgage lending in France is tightly regulated. Borrowers cannot exceed a 35% debt-to-income ratio, and the APR (TAEG) must remain below the legal usury rate.
As interest rates rise, monthly repayments increase accordingly, making these thresholds increasingly restrictive—even for high-net-worth individuals and premium real estate investors.
A major challenge for high-end real estate projects
In this challenging financing environment, tailor-made mortgage solutions are more crucial than ever, particularly for luxury real estate projects in Paris, Neuilly, Cannes, Brussels or abroad.
Exell Crédit, your partner for bespoke financing
Planning a high-end real estate acquisition?
Trust Exell Crédit, Vaneau Group’s mortgage brokerage service, for confidential, efficient and customized financing solutions.
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contact@exellcredit.fr