Mortgage lending: Volume surged by nearly 30% in 2025
With 171.3 billion euros in new home loans granted in 2025, the mortgage market has clearly rebounded, according to the ACPR’s annual report released on July 30. The banking regulator notes that the rebound occurred without any relaxation of regulatory safeguards. By early 2026, however, the recovery had stalled.
This is the most comprehensive overview of the market—the one that serves as the benchmark for both bankers and government agencies. Each year, the Prudential Supervision and Resolution Authority (ACPR), the banking regulator affiliated with the Banque de France, publishes its report on housing finance. The 2025 report, published on July 30 (Analysis & Synthesis No. 183), describes a market in a “normalization phase”: €171.3 billion in housing loans were granted over the year, a 29.3% jump compared to 2024. The total outstanding balance—that is, all real estate loans currently being repaid—reached 1,285 billion euros at the end of 2025. And the rebound is not due to loan renegotiations, whose share fell to 14.4 percent: excluding renegotiations, new lending increased by 33.2 percent.
The driving force behind this recovery was the easing of interest rates that began in mid-2024. Rates stopped falling in mid-2025, settling at an average of 3.08% in December, before rising slightly in early 2026. The real estate market followed suit: transactions in the existing-home market rose 12.5% year-over-year, and prices rebounded by 1.0%. Relative to national wealth, credit issuance now accounts for 7.1% of GDP, up 1.6 percentage points year-over-year. It remains concentrated in the hands of mutual banks, which hold more than 80% of outstanding loans.
The Return of First-Time Homebuyers, the Retreat of Investors
The recovery has a face: that of households buying their first home. First-time homebuyers account for 43.7% of new loans, up 3.1 percentage points year-over-year. Conversely, rental investment has fallen to 12% of new loans, down 3 percentage points, in an interest rate environment deemed “less attractive for this segment” by the ACPR. Existing-home purchases account for 77.6% of loans, and the share of bridge loans—transitional loans granted to households buying a new home before selling their current one—has fallen to 6.4%, a sign of a more fluid market. As for fixed-rate loans, they remain the near-universal norm, accounting for 99.6% of new loans—a uniquely French characteristic that shields borrowers from rising interest rates throughout the life of the loan.
Loan amounts, meanwhile, continue to rise. The average loan amount stands at 193,948 euros, up 5.8% year-over-year, with an average term of 22.4 years at the time of origination. The average debt-to-income ratio—the portion of a household’s income devoted to loan repayments—remains stable at 30.4%, while the debt-to-income ratio rises marginally to 4.5 years’ worth of income. One indicator, however, is on the rise: the LTV (loan-to-value ratio), which measures the ratio of the loan amount to the property’s value, reached an average of 79.9%, up 2.1 percentage points from 2024. In other words, buyers are financing a growing portion of their purchases with loans and contributing proportionally less of their own savings.
The HCSF’s safeguards held up
Any rebound in credit raises the same question: Have the banks opened the floodgates too wide? The ACPR’s answer is no. The High Council for Financial Stability (HCSF) standard, which in principle caps a borrower’s repayment burden at 35% of income, is being met. Loans exceeding this threshold account for only 16.2% of new lending, down from 27.9% in 2020, before the rule became mandatory. Loan terms exceeding 25 years remain marginal (7% of loans), and the authorized exemption margin—which allows banks to waive the rule for up to 20% of their loan portfolio—is utilized at only 16.6%.
On the risk front, the indicators remain positive. Default rates account for 0.62% of performing loans, a level that is slightly higher but still contained. The cost of risk stands at 0.03% of outstanding loans, a negligible amount. According to the ACPR, these figures reflect the strength of the French model: fixed interest rates, loans secured by collateral in 97.4% of cases, and banks that base lending decisions primarily on the borrower’s creditworthiness, not on the value of the property.
What remains is the shift seen at the start of the year. In the first quarter of 2026, new loan origination grew by only 3% year-over-year, transactions stagnated (+0.1%), and prices fell by 0.7%. The bulk of the recovery appears to be behind us: after a year of rebound, the market is settling into a significantly slower pace, under the watchful eye of a regulator that, for now, has found no cause for complaint regarding lenders’ practices.
