Are Mortgage Rates Set for a Prolonged Climb? What Homebuyers Need to Know
Recent forecasts suggest mortgage rates could continue to rise through 2027. But is a significant shock to the credit market truly on the horizon? Experts at Pretto are approaching these predictions with caution, and here’s a detailed look at what’s driving the conversation.
Key Takeaways
- Credit Logement predicts rates reaching 3.95% by the end of 2027.
- Banks remain competitive, particularly for strong applicants and in certain regions.
- Pretto anticipates rate stabilization around 3.50% in 2026, with limited increases.
Credit Logement Predicts a Sustained Increase
The Observatoire Crédit Logement/CSA recently presented a clear message: the upward trend in interest rates that began in late 2025 is expected to continue throughout 2026 and even into 2027. According to their projections, average rates could reach as high as 3.95% by the end of 2027.
“We are currently in and heading towards two years of rising credit rates,” explained Michel Mouillart, the economist leading the Observatoire Crédit Logement/CSA. “As of mid-January, we’re already at 3.21% compared to 3.17% in December and 3.06% in June – and it’s still climbing.”
Economic Context: Under Pressure, But Controlled
The Observatoire du Crédit Logement believes the current economic reality is prompting banks to adjust credit costs and increase borrowing rates while simultaneously striving to maintain borrower solvency.
The context remains complex, with political instability, high public debt, geopolitical tensions, and uncertainties surrounding housing policy all potentially causing short-term adjustments to rate grids. However, a key indicator offers reassurance: the 10-year OAT (French Treasury Bill) has remained relatively stable despite these challenges. This suggests that markets are increasingly adapting to instability.
Interestingly, a recent decoupling has been observed between the OAT and bank lending rates. Some banks have slightly reduced their margins to remain competitive, especially for prime borrowers and through targeted offers. This demonstrates that rate grids aren’t simply a mechanical reflection of the OAT. In fact, the increases observed at the beginning of the year have been moderate – around +0.05 percentage points, according to Pretto’s data. See the latest analysis here.
However, this situation could evolve. If the OAT were to rise sustainably, a broad-based increase in mortgage rates would likely follow.
“Banks remain proactive in lending, even in an uncertain environment. They clearly prioritize well-structured applications, focusing on acquisition and retention rather than mere caution.”
Is Credit Logement Too Pessimistic?
- In July 2025, Credit Logement predicted a peak rate of 3.40% in 2026. Pretto’s average rate in January 2026 was 3.30% across all durations. Learn more about borrowing rates.
- In October 2025, these forecasts were revised downwards to a scenario of stability around 3.25%.
In other words, projections are constantly evolving, often in a more favorable direction than initially anticipated. Furthermore, numerous parameters remain difficult to predict looking ahead to late 2027, including the European Central Bank’s monetary policy, the international context, France’s budgetary trajectory, and the political calendar.
Crucially, this perspective appears somewhat conservative given a key fact: banks continue to lend actively. Credit remains a strategic product for attracting and retaining customers.
Regions Still Offering Competitive Rates
Another reassuring sign: regional disparities remain significant, and some areas continue to offer excellent conditions. For example, in January, Île-de-France saw rates as low as 2.72% over 15 years for top-tier applicants (according to Pretto’s grid). This proves that even in a tighter environment, attractive opportunities still exist.
According to our projections, which are more optimistic than those of Credit Logement, the period of sharp rate increases is now behind us, barring any major economic shock. The market is moving towards a gradual normalization, returning to a more “classic” environment similar to that before 2015.
Remember, rates around 1% were not the historical norm but rather the result of a unique situation linked to the ultra-accommodative monetary policies implemented during the Covid-19 crisis and exceptionally low inflation during that period. Historically, average mortgage rates in France over the past 20-25 years have typically ranged between 3% and 5%.
Credit Logement may be erring on the side of caution. In recent weeks, rates have signaled a phase of stabilization after the tensions of previous years. However, the market climate remains subject to numerous external factors that could still cause some adjustments. Stabilization doesn’t rule out temporary rate fluctuations.
Frequently Asked Questions About the 2026 Market
Why do rate forecasts change so often?
Because rates depend on many unpredictable factors: ECB decisions, inflation, public debt, political climate, international tensions… Experts regularly adjust their scenarios accordingly.
Could rates rise sharply again?
A significant surge seems unlikely without a major economic shock. The 10-year OAT remains stable around 3%, and January’s rate increases were moderate (+0.05 percentage point).
Can I still negotiate my rate in 2026?
Yes. Banks are selective but offer negotiation room for well-structured applications: a down payment exceeding 10%, limited debt, and sound financial management. In January 2026, the best profiles still secured 2.72% in Île-de-France (15 years) according to Pretto’s grids.
Should I borrow now or wait for rates to fall?
Borrow now if your project is ready. Future increases are likely to be limited, and waiting carries risks: rising property prices, stricter lending conditions, and lost opportunities. The key is to prepare your application thoroughly to secure the best terms.
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