Interest Rate Decrease for Home Savings Plans in 2025
Starting January 1, 2025, the interest rate for home savings plans (PEL) will decrease by half a point to 1.75%. This change, announced in the Official Journal, marks the first reduction in over eight years, following a series of increases that raised the rate to 2.25% for PELs opened in 2024. The PEL, a regulated savings product aimed at facilitating real estate projects, has seen its interest rate fluctuate significantly since its last drop in August 2016, when it fell from 1.50% to 1%.
Philippe Crevel, director of the think tank Cercle de l'Épargne, noted that the PEL will continue to be less attractive compared to other regulated savings options, such as the Livret A and Livret de développement durable et solidaire, both currently offering 3% interest, and the Livret d'épargne populaire at 4%. Although these products are expected to see a decrease in their rates on February 1, 2025, they will still remain more appealing than the PEL.
Decline in PEL Popularity
As of October 2024, outstanding PEL amounts totaled €224 billion, the lowest level since April 2015 and significantly below the peak of €291 billion recorded in January 2022. Crevel expressed concern that the PEL is no longer effectively serving its purpose of assisting individuals in acquiring primary residences, especially amid a housing market crisis. He emphasized the need for a reconfiguration of this nearly 60-year-old savings product to better meet current market demands.
To open a PEL, households must make an initial deposit of €225 and contribute a minimum of €540 annually, with a cap of €61,200. The contract lasts a minimum of four years and can be extended up to ten years, after which subscribers may secure a property loan at a predetermined rate based on their contributions and the duration of the contract. However, if funds are withdrawn early, the account is closed immediately.
