French mortgage rates drop again new all time lows

15 June

French mortgage rates have dropped to new all-time lows with lending in France is now so cheap that buyers can fix a 20 year repayment mortgage at an incredible 3.10%, down from 3.75% roughly a year ago.

“This latest drop takes us into unchartered territory," said Nicholas Leach at Athena Advisors. "The latest figures from the French Notaires show that transactions in 2014 are up on last year and this latest drop will push more buyers to make their move on French real estate.”

In real terms, this rate drop represents a saving on interest payments of €7,261 per €100,000 borrowed compared to this time a year ago. On an average mortgage amount of €400,000 this equates to an eye-popping saving of €29,044 on interest payments over the full term of the mortgage.

John Busby French Private Finance comments:

"A 20 year fixed rate mortgage in France hit 3.10% and 25 year fixes for 80% of the purchase price were available from 3.50% for non-resident buyers this week as the TEC 10 index tumbled to a new all-time low of 1.22%. These are now officially the lowest rates we have seen for French mortgages this century or last."

"These record low rates have mainly been driven by the crashing of long term government bond yields across Europe. 10 year bond government bond yields are now also at historic all-time lows, so low in fact that investors are now lending to the German government at 1% for 10 years."

"Of course it is all relative to the risk one has in the market but it is going to take some serious work by European Governments and Mario Draghi to raise sentiment for growth, though it is nothing a good dose of QE won’t help to sort out. In the meantime those looking to buy French property can lock in incredible value at current rates as can European governments looking to refinance their debt pile."

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