Over the past couple of years, we at 56Paris Real Estate have observed some reluctance among our international buyers to finance their Paris real estate purchases through a mortgage. After a decade of exceptionally low interest rates, it’s understandable: rates rising to 4% or more seemed like a sharp contrast—and perhaps not worth the perceived hassle.
But as we take a step back and look at the broader picture, a more nuanced and encouraging narrative emerges. In fact, the current conditions may offer strategic advantages for non-resident buyers who are open to financing.
Let’s take a closer look at how interest rates have evolved over the past 25 years, and why borrowing to purchase property in France can still make sense today.
A Look Back: 25 Years of Interest Rate Trends in France
2000–2008: High Rates Amid Housing Boom
French mortgage rates ranged from 5% to 6% for 20-year loans as housing demand surged. Rates gradually dipped to 4.5% by 2008.
2008–2010: Crisis-Driven Decline
Following the 2008 financial crisis, the ECB slashed rates. French mortgage rates fell sharply from 5% to 3%.
2010–2020: A Decade of Record Lows
Rates dropped steadily, falling below 3%, then reaching historic lows of 1%–1.5% by the end of the decade.
2020–2022: Stability Before Inflation
Rates remained low during COVID, then edged up slightly to 2% as inflation pressures emerged.
2022–2025: Sharp Rise, Then Relief
The ECB’s response to inflation pushed mortgage rates over 4% in 2023. As of March 2025, average rates have eased to around 3.20%, with further declines possible.
Why Financing Still Makes Sense Today
Given this context, today's interest rates—while higher than during the 2010s—remain attractive in historical terms. More importantly, they offer several advantages for international buyers, particularly those who are non-resident in France.
Competitive Compared to Other Markets
Mortgage rates in France are still lower than in many countries. In the US, for example, 30-year fixed rates currently stand at 6–7%. In contrast, non-resident buyers in France may still access rates around 3.20–4%, depending on their financial profile.
Strategic Advantages for International Buyers
1. Wealth Tax Optimization
France’s IFI (Impôt sur la Fortune Immobilière) applies to real estate equity above €1.3 million. A mortgage can reduce your taxable equity, keeping you below this threshold or significantly decreasing your tax burden. In some cases, tax savings can outweigh mortgage interest costs.
2. Currency Hedging
Taking out a Euro-denominated mortgage naturally hedges your investment against exchange rate fluctuations. This is particularly useful if your home currency is volatile or currently weaker against the Euro.
3. Liquidity and Portfolio Diversification
Financing a French property allows you to keep more capital available for other investments. With US cash yields currently between 4% and 5%, and the S&P 500 delivering an average annual return of around 10%, the opportunity cost of tying up capital in real estate has grown. Borrowing in France can provide flexibility while still allowing exposure to Paris’ stable and historically resilient property market.
Important Considerations for Non-Resident Buyers
While financing is accessible, it’s important to know that conditions for non-resident buyers differ slightly:
Higher Down Payments: Non-residents typically need a minimum 25% deposit, compared to up to 100% financing for French residents.
Thorough Income Verification: Banks scrutinize international profiles more closely.
Euro-Denominated Loans: All mortgages are in euros and secured against the French property itself.
These additional requirements are reasonable when weighed against the strategic benefits and the comparatively low interest rates.
Is Financing Right for You?
If you're considering purchasing in Paris, financing might be worth another look. With rates softening and long-term benefits including tax optimization, currency protection, and portfolio leverage, taking out a mortgage could be a smart move.
At 56Paris, we help our clients evaluate whether financing aligns with their overall investment goals. If you’d like a personalized mortgage simulation or help identifying the right price range for your needs, we’re here to guide you.
Let’s explore how your Paris real estate investment can work harder for you—get in touch.