Fixed Rate or Variable Rate: The Right Choice for Your Loan in 2025

par | Sep 7, 2025 | Funding

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FIXED RATE OR VARIABLE RATE: THE RIGHT CHOICE FOR YOUR LOAN IN 2025

In 2025, choosing between a fixed rate or a variable rate for your mortgage can seem confusing, especially in an economic context where rates show stability after an initial increase at the beginning of the year. How do you decide which rate type is best suited for your situation? This is what I will attempt to help you understand through this article. **UNDERSTANDING THE EVOLUTION OF MORTGAGE RATES IN 2025**

This year, mortgage rates have experienced some roller coasters. In June 2025, according to the CAFPI barometer, average rates were 3.04% over 15 years, 3.15% over 20 years, and 3.28% over 25 years. These figures contrast with those announced by other players such as Crédit Agricole and Meilleurtaux, which reveal interesting variations. For example, Crédit Agricole indicates an average rate of 3.45% for a 20-year loan, while Meilleurtaux announces slightly lower rates from 3.14% over 15 years to about 3.35% over 20 years.

 

CHOOSING A FIXED RATE FOR STABILITY AND PREDICTABILITY

The fixed rate offers the advantage of a constant monthly payment throughout the loan term, which is ideal if you want to avoid surprises. In 2025, with fixed rates around 3.3% to 3.5% for terms of 20-25 years, this option remains reassuring for those seeking stability against a potential rise in rates.

 

THE VARIABLE RATE: RISKS AND OPPORTUNITIES

Choosing a variable rate can be tempting if you hope for a rate decrease. In 2025, the 3-month Euribor is at 2.01% and tends to rise, adding a risk factor to this option. However, variable loans are often capped, limiting rate increases, which helps to avoid unpleasant surprises. This option could be appealing if you plan a quick repayment or have a good risk tolerance.

 

THE MIXED RATE OPTION

The mixed rate loan combines the best of both options: an initial fixed rate, often for 7 to 10 years, followed by a capped variable rate. This solution aims to offer a compromise between security and flexibility. **LIST OF ADVANTAGES AND DISADVANTAGES**
– Advantages of the fixed rate: Stability, predictability, security.
– Disadvantages of the fixed rate: Unable to benefit from potential rate decreases.
– Advantages of the variable rate: Potential for lower monthly payments, flexibility.
– Disadvantages of the variable rate: Risk of rising monthly payments if the Euribor increases.

 

In 2025, the choice between a fixed rate or a variable rate for your mortgage largely depends on your risk tolerance and economic forecasts. Fixed rates offer reassuring security for those who want to avoid market fluctuations. However, if you are willing to take some risks, a variable rate could offer potential savings, especially if you are considering a quick repayment. Feel free to share your thoughts on this issue below and sign up for our newsletter to receive financial advice directly in your inbox.

FAQ

What is the best choice between a fixed rate or a variable rate in 2025?** This depends on your profile, risk tolerance, and personal forecasts. A fixed rate is generally advised for those who want to minimize uncertainties related to rate fluctuations. **How does a mixed rate loan work?** It starts with a fixed rate during an initial period (often 7 to 10 years) and then becomes a capped variable rate, thus combining elements of both rate types. **What does it mean if the Euribor increases?** If the Euribor increases, it can lead to a rise in monthly payments for variable rate loans, increasing the cost of credit.