Mortgages: Rates Are Rising, and Borrowers Are Adjusting

The era of low interest rates has come to an end. Rather than giving up, prospective homebuyers are reevaluating the term, type of property, and mortgage insurance, according to the 2026 market survey by a major broker. The government, too, has tools at its disposal to revive the market.
 

A couple planning to take out a 200,000-euro loan over 25 years can no longer afford quite the same home as they could a year ago. The average 0.2-point increase in interest rates over the past twelve months adds 22 euros to their monthly payment, reduces the size of their home by the equivalent of 2.5 square meters in cities like Dijon or Reims, and raises their debt-to-income ratio from 30% to 31%. 

The impact is significant for low-income households, but it remains manageable for a large proportion of borrowers. This explains why the market remains active despite an economic environment marked by rising inflation and geopolitical tensions.
 

The CAFPI 2026 Barometer, conducted from May 28 to June 5 among 1,111 borrowers who have received financing since 2023, paints a picture of a market that is slowing down but not coming to a halt. Loan origination is expected to decline by nearly 6.8% in volume this year, following a 33% increase between 2024 and 2025. April marked the first year-over-year decline on a rolling 12-month basis since 2024, at 4.7%. 

Prices, meanwhile, are still rising modestly—around 1.90 percent year-over-year nationwide—while buyers’ bargaining power is strengthening in several major cities. The balance of power between sellers and buyers is shifting in those cities, creating room for negotiation that had disappeared during the years of euphoria.
 

Twenty-five years: the new standard in financing
Waiting it out is no longer an option. According to the survey, 95% of French people no longer believe interest rates will fall by the end of the year, and more than one in two expects another increase. However, only 7% are postponing their plans. Two-thirds say they are adapting or consider the current conditions acceptable. Eight out of ten borrowers say they are willing to take on a 25-year or longer mortgage—a term that has become the standard—and 40% are considering an older home in need of renovation. “The era of low interest rates is a thing of the past,” observes Julien Langlade, president of CAFPI. Purchasing behavior is shifting permanently toward longer-term projects and properties in need of renovation—a sign that households prefer to adjust their criteria rather than postpone homeownership indefinitely.
 

Public Policy Leverage and Insurance: Two Areas for Action
The broker identifies several policy levers that could support the economic recovery. Expanding the zero-interest loan program to couples starting with their first child would, under the terms currently under discussion, make 10% of households eligible, compared with 0.16% today. Extending the Jeanbrun program to older housing and single-family homes could increase rental investment projects by 20%. 

Finally, taking disposable income into account when calculating debt would allow some of the 6% of applications rejected since 2024 for exceeding the 35% threshold to be approved, without undermining the financial system. There remains one often-overlooked factor: loan insurance. 

As a result of reforms making it easier to cancel policies, alternative insurance plans—as opposed to those offered by banks—have seen an average rate decrease of between 10 and 20 percent over five years. For a couple in their thirties who are nonsmokers, in good health, and employed under permanent contracts, the savings can exceed 1,000 euros per year—or more than 20,000 euros over the total term of the loan. When monthly payments are fixed, it is sometimes this final consideration that tips the scales from a rejection to an approval.
 

In this landscape, mortgage brokers are once again taking on the role of arbiters. Comparing offers, negotiating the bank’s margin, and optimizing insurance coverage are once again becoming decisive factors when every tenth of a point affects purchasing power. For first-time homebuyers, the combination of a longer loan term, a larger down payment, and delegated insurance often determines the feasibility of the project—more so than waiting for interest rates to fall, which no one expects to happen in the short term.