Along with falling residential prices, already low mortgage rates in France are expected to drop even further, fueling interest among foreign investors. See the following article from Property Wire for more on this.
The French property market has historically low fixed rate mortgage deals which are expected to remain low and even fall further, according to experts.
French mortgage specialist Athena Mortgages said it has seen a sharp rise in the number of inquiries in August from UK buyers looking to take advantage of the cheap fixed rate deals currently on offer.
Its experts predict that September could be an even busier month as rates are expected to fall even further. As a result it has launched its lowest ever fixed rate deals, with 15 year fixed rates from 3.3%, 20 year fixed rates from 3.45%, and 25 year fixed rates from 3.60%, all at 80% LTV.
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The reason for these record low fixed rates has been the downward pressure on the TEC10 index, due to a combination of a low inflation environment and investors seeking the safe haven of government bonds, according to Athena director John Busby.
The TEC10 index is the benchmark index against which French fixed rate mortgages are calculated and has been steadily falling since the start of the year and has consistently been below 3% during August, reaching an all time low of 2.60% on Tuesday, 24th August, compared with 3.65% on 6th January 2010.
‘France is in a historically low interest rate environment at the moment with average fixed rate mortgages at levels not seen since the end of 2005. At that time though the TEC10 index was well above 3%. Now with the TEC10 at 2.60% and predicted to fall even further in the coming weeks, average fixed rates could well hit record low levels in September,’ he explained.
‘With fixed rates falling, we have seen a noticeable shift in the types of mortgages people are ringing to discuss. Fixed rates are now the overwhelming choice amongst buyers. This is not just because of the rate drop, its also because the margin between the average fixed and variable mortgage has narrowed since May, making fixed rate deals even more attractive,’ said Busby.
‘For UK investors looking for a safe, long term investment, second home buyers or people looking to relocate to France, there has never been a better time to purchase French property. Borrowing conditions are as good as they’ve ever been, and with property prices still well below their peak, UK buyers have a great opportunity to pick up a property at rock-bottom prices and fix monthly payments for 20 plus years at fantastic rates,’ he added.
Meanwhile the mid year report from Federation of French Estate Agents shows that property prices fell 0.7% in the last 12 months. Only Paris and Brittany have shown increases of more than 2% for the past 12 months.
‘It seems as though we are at the bottom in terms of French house prices and that the upward trend will begin shortly. Borrowing conditions are as good as they have ever been and it will not be long before this money filters through and starts to increase prices,’ said Busby.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.