When Is the Best Time to Borrow? Focus on Mortgage Rates

The best time to borrow: why mortgage rates drive the decision

Asking about the best time to borrow is often the same as asking whether you should buy or rent right now or wait. The answer depends heavily on one key simulator parameter: the mortgage interest rate, or taux_pret.

In 2024–2025, typical mortgage rates in many euro-area countries sit around 3.5–3.8% for 20 years, compared with below 1.5% in 2021. That shift completely changes the buy or rent calculation and the right timing to buy property.

This article deliberately focuses on one parameter of the buy-or-rent simulator: the taux_pret. You’ll see how a difference of just a few tenths of a percent can mean tens of thousands of euros over the life of the loan, and how to use a tool like buy-or-rent.net to judge the best time to borrow.

1. Why the mortgage rate is central to timing your purchase

Your mortgage rate determines:

• Total interest you pay to the bank.
• Your monthly payment (and thus your borrowing capacity).
• Your disposable income compared with paying rent.
• The long‑term buy or rent outcome over 10, 15 or 20 years.

In a simulator like buy-or-rent.net, the taux_pret is one of the first fields you enter, together with:

• Purchase price of the property.
• Loan term (e.g. 20 or 25 years).
• Your down payment.

Unlike the property price (driven by the local market) or your down payment (driven by your savings), the mortgage rate mostly depends on:

• Central bank policy (ECB decisions).
• Your borrower profile (income, job stability, existing debt).
• The moment you apply for the loan.

This time dimension is exactly why the rate is central to identifying the “best time to borrow”.

2. How a rate change impacts your project: concrete numbers

2.1. Baseline example: €300,000 over 20 years

Assume you buy a property for €300,000 (excluding notary fees), financed 100% over 20 years (240 months), ignoring insurance for now:

• At 2.0%: monthly payment ≈ €1,518; total interest ≈ €64,000.
• At 3.6% (roughly current average): monthly ≈ €1,773; total interest ≈ €126,000–130,000.
• At 4.5%: monthly ≈ €1,897; total interest ≈ €155,000–160,000.

Going from 2.0% to 3.6%:

• raises the monthly payment by about €255;
• almost doubles total interest (roughly +€60,000).

Over 20 years, a difference of 0.5–1 percentage point adds up to the equivalent of several years of rent.

2.2. Buy or rent comparison with €1,200 rent

Now assume that renting a similar property costs €1,200 per month:

• If you rent for 20 years and rents increase by 2% per year on average (close to long‑run rent indexation), you’ll pay around €350,000 in total rent.
• If you buy at 3.6%, you’ll repay roughly €300,000 principal + ≈ €128,000 interest = €428,000 (before other ownership costs).

At first glance, renting looks cheaper. But a proper buy or rent comparison must also include:

• Future resale value after 20 years (price growth or stagnation).
• Notary fees (typically 7–8% for existing homes, 2–3% for new builds).
• Property tax and its annual increase.
• Maintenance and renovation costs (especially energy upgrades and DPE‑type ratings).
• The investment rate you can earn if you stay a renter and invest your savings instead.

The mortgage rate is the starting point, but it’s not enough on its own. That’s why the buy-or-rent.net simulator builds the full picture around the taux_pret.

3. Mortgage rates and timing: three typical scenarios

3.1. Scenario 1: higher rates but flat or falling prices

This resembles parts of the 2023–2024 market:

• Mortgage rates around 3.5–4.0%.
• Prices flat or slightly down in several cities.

Here, the best time to borrow depends on your horizon:

• If you plan to stay long term (10–15+ years), a somewhat higher mortgage rate can be offset by a lower purchase price.
• If your horizon is short (5–7 years), notary fees, agency fees and interest weigh more heavily; the taux_pret becomes critical.

Example: if the market falls 5% on a €300,000 property, you save €15,000 on the price, which partly compensates for a higher rate.

3.2. Scenario 2: very low rates but very high prices

This is close to what many markets saw between 2017 and 2021:

• Mortgage rates often below 1.5%.
• House prices rising strongly, especially in big cities.

In that environment, the “best time to borrow” seemed obvious: lock in low rates. But the risk was overpaying for the property. A 1.2% mortgage on a home bought 20% above its sustainable value can be less attractive than a 3.6% loan on a fairly priced property.

The buy-or-rent.net simulator lets you test this by varying:

• The taux_pret.
• The purchase price.
• The long‑run price growth scenario over 10–20 years.

3.3. Scenario 3: expected rate cuts ahead

Another common case: media headlines suggest mortgage rates could fall in the next 6–12 months. Should you wait?

Two opposing effects appear:

• Waiting may secure a lower taux_pret (e.g. from 3.6% down to 3.0%).
• But if rates fall, demand usually rebounds and prices may rise, limiting your negotiation power.

Simplified example:

• You buy now: 3.6% rate on a €300,000 property.
• Or you wait one year: 3.0% rate but price up to €315,000 (+5%).

The lower rate cuts interest, but the higher price increases the principal you must repay. Only a full simulation over 15–20 years can show which option is better in your specific context.

4. Mortgage rate, insurance and your real borrowing cost

A frequent blind spot is borrower insurance (taux assurance). A contract at 0.25% vs 0.45% on the loan amount can make a difference of several thousand euros.

On €300,000 over 20 years:

• At 0.25%: roughly €12,000 total insurance cost.
• At 0.45%: roughly €21,600 total insurance cost.

Your real borrowing cost is the combination of taux_pret + insurance rate. A slightly higher mortgage rate can be partially offset by:

• A cheaper delegated insurance policy.
• A shorter loan term.
• A higher down payment.

The buy-or-rent.net simulator lets you plug in both taux_pret and insurance rate to compare the true cost of owning vs renting.

5. Best time to borrow vs invest: the opportunity cost

If you hesitate to buy, you’re really weighing whether you should:

• Borrow now and become a homeowner.
• Or keep renting and invest your savings in financial assets (ETFs, savings plans, etc.).

Here, two simulator parameters matter:

• The taux_pret (cost of borrowed money).
• The investment rate (expected return if you invest instead of buying).

If your long‑term net investment return (after fees and tax) is consistently higher than the mortgage rate, borrowing while keeping some capital invested can make sense. If the mortgage rate is very high relative to your realistic investment returns, the cost of buying increases.

Example:

• Mortgage rate: 3.6%.
• Expected long‑run return on a diversified portfolio: 5–6% gross, maybe 3–4% net.

In this case, the buy or rent decision also depends on:

• Your tolerance for market risk.
• Your ability to stick to a savings plan if you continue to rent.

The buy-or-rent.net tool helps you compare these strategies by adjusting both taux_pret and investment rate.

6. Other parameters that interact with the mortgage rate

Even though this article focuses on the taux_pret, the best time to borrow also depends on several other parameters you can adjust in the simulator.

6.1. Annual inflation

High annual inflation (e.g. 4–5%) erodes the real value of your fixed monthly payments over time, especially if your income follows inflation at least partially. A fixed mortgage rate can become relatively cheap in real terms.

6.2. Property tax and its revaluation

Property tax can range from about €450 to over €5,000 per year depending on the city, and it often sees a yearly increase that may outpace general inflation. It does not change your mortgage rate, but it affects your overall homeownership budget and hence your timing to buy.

6.3. Prepayment penalties

Prepayment penalties are usually capped at 3% of the remaining principal or six months of interest, whichever is lower. If you expect to sell quickly or refinance when rates fall, these penalties must be considered when deciding whether now is the best time to borrow.

7. So, when is the best time to borrow?

There is no universal answer. The “best time” depends on:

• Your personal stability (job, family, location).
• Your expected holding period for the property.
• Current and expected levels of mortgage rates.
• Likely house price trends in your area.
• Your alternative investment options.

One thing is clear: the taux_pret is a major lever. A difference of 0.5–1 percentage point can dramatically change the 20‑year outcome of a buy or rent calculation.

This article provides general information only and is not personalized financial advice. Your situation is unique and needs to be assessed using your own data and assumptions.

To see whether now is the right time for you to borrow, test different mortgage rates, loan terms and price scenarios with a dedicated tool: Simulate your situation on buy-or-rent.net.