Reduced implied rate on residential loans reaches an alarming 3479% in June
In the realm of construction and real estate, a significant shift has been observed this year. The trend in building and housing rehabilitation licenses has shown a noteworthy increase of 15.7% as of May 2025, compared to previous data. This surge indicates a growing interest in renovations and repairs, rather than just new construction.
This trend is indicative of a broader push towards adaptive reuse and rehabilitation projects, favoured due to sustainability concerns and regulatory incentives such as tax credits for energy-efficient upgrades and historic preservation. Despite challenges like regulatory hurdles and higher labor costs, the growth in rehabilitation licenses suggests a strong interest in updating and repurposing existing structures in the housing market.
On the other hand, general building permits for new residential construction have remained relatively stable but are slightly below last year's levels, indicating a proportionally larger focus on rehabilitation and renovation projects in the current market environment.
In terms of housing credit, since January 2024, the implicit interest rate has experienced a reduction of 117.8 basis points. This reduction continued in June, with the interest rate dropping from 3.057% in May to 2.951%. Moreover, the implicit interest rate for housing credit in June decreased further to 3.479%.
This decrease in the interest rate is a reduction of 9.1 basis points from the previous month. Interestingly, this decrease occurred in June, marking a significant drop from the peak reached in January 2024.
The average repayment for all contracts in June was 394 euros, a decrease of 1 euro compared to the previous month and 10 euros less than in June 2024. The average outstanding capital for all housing credits increased to 71,677 euros.
For contracts concluded in the last three months, the average outstanding capital was 157,350 euros, an increase of 3,633 euros from May. However, no information about the number of contracts concluded in the last three months was provided.
It's important to note that no new information about building and housing rehabilitation licenses was provided in the current update. Similarly, the average repayment for housing credits was not specified.
This combination of factors - a rise in rehabilitation licenses, a decline in housing credit interest rates, and a shift towards adaptive reuse - paints a picture of a market that is increasingly focused on sustainability and updating existing structures, while offering more affordable financing options for homeowners and developers.
What could be the potential impact on personal-finance with the decrease in housing credit interest rates and the growth in rehabilitation licenses? Perhaps, considering the decrease in the implicit interest rate for housing credit and the rise in rehabilitation licenses, individuals and developers might find it more financially appealing to invest in personal-finance projects that focus on updating and repurposing existing structures, as the costs of renovations may become more affordable.
