Why Is It Time to Reevaluate the Value of Your Old PEL?

Home Savings Plans (PEL) opened between 2016 and 2022 and maintained for at least four years offer the option to borrow at a favorable interest rate of 2.2%.
 

According to a recent report by the Banque de France, rising mortgage rates could make the older Housing Savings Plans (PEL) more attractive as a financing tool for real estate projects. 

During the period of exceptionally low interest rates between 2015 and 2022, many PEL accounts were used as traditional regulated savings vehicles, without resulting in a loan. Over time, this product evolved into an investment in its own right, offering attractive returns, rather than a financing product as originally intended.
 

The PEL is actually a hybrid product: it allows you to build up savings for the purchase of real estate or for home improvements, and then to finance that project by granting loan rights. The PEL therefore has two rates: one that determines the return on the savings deposited, and another that sets the loan rate for the next 15 years.
 

75% of PEL accounts offer a loan rate of 2.5% or less, a very competitive rate compared to current market rates, which are slightly below 4% (excluding insurance and other fees). It is the older PEL accounts—opened before 2022, when mortgage rates were still low—that offer the most favorable terms. The redemption rate—which corresponds to the borrowing rate—for PELs opened in 2023 is set at 3.2%, but more importantly, at 2.2% for those opened between 2016 and 2022, provided they are held for at least four years.
 

Rising mortgage rates and lower returns on PEL accounts compared to other savings products could help restore the PEL to its original purpose, according to the Banque de France’s annual report on regulated savings. It appears that the PEL is regaining its primary function—namely, to provide financing for a real estate project at a favorable rate—and is no longer viewed as merely an investment vehicle.
 

Currently, the outstanding balance of PEL savings accounts has been falling sharply since the end of 2022. According to the latest data from the Banque de France, it fell from 282 billion euros to 236 billion euros in a year and a half, as of the end of April (-16.3% over the period), returning to a level not seen since the end of 2015.