Decision Made Regarding New Loan Rules for Building Construction in the Netherlands
In the Ile-de-France region, the mortgage interest rates for the rest of 2024 are expected to fluctuate, with an average 30-year fixed rate ranging between 6.18% and 6.92%. This outlook reflects a cautiously stable but elevated mortgage interest rate environment, according to the latest data and forecasts.
Borrowers with an annual income of at least €70,000 for a single person and €100,000 for a couple are considered favourable profiles for borrowing at less than 3% in the region. This comes after a steady decline in rates from their peak of over 4% at the end of 2023, with banks borrowing at the 3.2% rate but lending at 3.16% for 20-year mortgages to homebuyers.
Despite the gradual decline, mortgage rates remain above historical averages, with some fluctuations expected throughout the year. According to predictions, mortgage rates will hover around 6.5% by the end of 2025. Factors influencing this trend include the Federal Reserve's monetary policy, inflation, economic sentiment, bond yields, geopolitical tensions, housing market dynamics, and government debt and policy.
Borrowers with strong credit are advised to shop around for good deals, as discounts can be negotiated on a case-by-case basis, despite the elevated rates. Some banks are extending offers of loans at bonus rates or doubling the amount of zero-rate loans until December, particularly for first-time buyers and those buying energy-efficient properties or carrying out energy renovation work.
Sandrine Allonier from Vousfinancer stated that demand from buyers is high, and banks have no interest in lowering their rates. Pascal Courtois, head of banking relations at Artemis Courtage, believes that rates are no longer decreasing and have reached a floor. The CEO of Cafpi recommends borrowers to sign their mortgage today, without waiting for a potential rate drop by the end of the year.
The overall trajectory into 2025 points to rates steadying around 6.5%, influenced by inflation, Fed policies, Treasury yields, and global economic factors. Mortgage interest rates for July remain stable for the third consecutive month, with the average rates at 3.10% for 15 years, 3.20% for 20 years, and 3.30% for 25 years.
[1] Freddie Mac. (2024). Mortgage Market Survey Archive. Retrieved from https://www.freddiemac.com/pmms/archive [2] Fannie Mae. (2024). Economic & Housing Outlook. Retrieved from https://www.fanniemae.com/content/dam/FannieMae/documents/pmms/reports/2024/05/202405-pmms-forecast-summary.pdf [3] Federal Reserve. (2024). Monetary Policy Report. Retrieved from https://www.federalreserve.gov/monetarypolicy/reports.htm [4] Board of Governors of the Federal Reserve System. (2024). Federal Open Market Committee. Retrieved from https://www.federalreserve.gov/monetarypolicy/fomc.htm
- Amidst the stable but high mortgage interest rates in Ile-de-France, potential investors might consider diversifying their portfolio by exploring alternative finance options such as real-estate investment trusts (REITs) or other forms of investment in the finance sector.
- For those with a solid financial standing and strong credit, the current elevated real-estate mortgage rates may present an opportunity to negotiate better terms on investing in real-estate properties, particularly with special offers from certain banks for first-time buyers or those focusing on energy-efficient properties.
