Paris wants to quintuple the surcharge on second homes

The mayor of Paris voted yesterday for a sharp rise in housing tax for second homes, asking that this increase be registered and passed by Parliament in the draft budget coming at the end of the year.

The proposed increase from the current 20% mark which has been in place since 2015 is of 100%, but only for “tension zones” namely Paris, the French Riviera, the Côte Basque, etc. This new rate would include some 90,000 second homes in Paris.

The measure, which generated €21 million in receipts in 2015 could generate an additional €70 million, but is more being seen as a way of pushing the owners to rent or sell their property so they can be inhabited.

According to electoral stats, the majority of these second homes are located in the most residential districts, between the 1st and 8th arrondissements of Paris.

A controversial surcharge

Effective from this year the 20% countrywide surcharge on second homes has not achieved its original objective, which was to encourage owners of vacant property to sell or to put on the rental market. One might think that this was because second homeowners can often swallow such an extra cost, but in fact it did not even get to that stage.

French municipalities were given the choice of whether to impose this extra tax and in the end only 98 out of a 1200 applied for the 20% increase. Locations with strong tourism demand were of course among those who applied, such as Paris, but also Toulouse, Nantes and Montpellier.

Most municipalities in the south adopted the tax, with more than a quarter of the identified towns located in the Alpes-Maritimes (Antibes, Le Cannet, Vence …). 16 Haute-Savoie municipalities have also decided to apply the surcharge. However with only 8% of municipalities opting for the application of the, the general consensus is that the government has fallen short of its goals.


French real estate: transactions are concluding faster

New figures from ‘Orpi’, the network of estate agencies across France, indicates that the purchasing power of buyers has grown with the sale duration reducing. The network says that 50% of its apartments and 54% of its homes were sold in less than 60 days in 2015 with vendors and buyers becoming more reasonable with sales prices.

In addition to buyers “returning to reason” other factors have also been taken into account. ‘Household morale’ is one, government incentives giving people a leg up onto the market are also helping, but overall it is the improved mortgage rates and lengthened loan durations that helping the most.

“Since 2011, the decline is equivalent to a decrease in housing prices of 16%. It is three times more powerful than the fall in property prices”, stated Michel Mouillart economist specializing in real estate.

The slight increase in mortgage rates during the summer also had a strong psychological impact on people’s ability to buy.


French Mortgage Watch – November 2015

mount blanc

Winter is coming

The French ski season is upon us and with it an increase in the number of people visiting the Alps and placing deposits on properties to purchase. In the past 18 months we have seen over €50m invested in Châtel alone, with big resorts like Val d’Isere and Courchevel also seeing huge demand, particularly in the new-build apartment market.

The economics of French property in prime locations is still compelling. The opportunity to lock in rates at such low levels for such long periods remains extremely attractive for foreign investors. The market would not be as buoyant if the rates were 2% higher but at these low levels and average yields for prime property still in the region of 3.5 to 4% there is still a queue of investors for the opportunities on offer.

In terms of outlook, it seems more likely that the French will lower interest rates than raise them. The 3-month euribor against which many variable rate loans are decided has delved further into the negative over the last month, with the 12-month euribor only just above zero. A 20 year fixed rate still stands at 2.7% only a few basis points off its historic lows.

 

img-john-Busby-French-private-finance

JOHN LUKE BUSBY
Private Clients Director

French Mortgage Best Buys
Repayment
RateDurationLTVDescription
1.90%20 years80%Tracker mortgage 3m euribor +1.9%
2.00%25 years80%Tracker mortgage 3m euribor +2.0%
2.70%25 years85%Rate capped + 1.5% for 10 years
1.90%20 years80%Rate fixed for the term
2.90%25 years80%Rate fixed for the term
3.35%25 years85%Rate fixed for the term
Interest Only
2.30%15 years70%Tracker +1.95%
2.60%15 years75%Tracker 3 month Euribor +2.55%
3.30%15 years70%Fixed rate

France in the Press

 French economy remains in growth after Paris attacks
Economically speaking, France is not as French as it first seems but there is a desperate need for it to embrace some structural reforms
 Paris tourism recovering after attacks — minister
Tourism in Paris is starting to recover, French Economy Minister Emmanuel Macron has stated.
 First snows as resorts ready
Both the Alps and Pyrenees have seen their first substantial snowfall over last weekend. Ski resort owners are relieved, having sat through autumn temperatures that were higher than average.

Area Guide


Paris 16th Arrondissement

Le Seziem, the largest of all the 20 Arrondissements, so large it has too postcodes (75016 and 75116). Size and wealth abound, and there’s also a pretty big park too, the 3nd largest in the city.
Read more

From the blog

French Mortgage Transaction of the Month\With the 3 month euribor staying in the negative there is a sense that rates may fall further, yet this has not stopped the appetite for the current 20 year fixed-rate mortgage product.
Read more
The French property market continues to reboundThe market for resale properties in France would appear to be continuing to come out of the downturn. The third quarter of 2015 was particularly active.Read more
French property price reductions slowIn the third quarter prices increased by 0.8% compared to the second. In one year, their decline continues to slow (- 1.2% against – 2.5% the previous quarter).Read more
How to rent your Paris apartment legally through AirbnbOwners wishing to rent their second home in Paris legally via Airbnb must now change its registered use into a commercial property.Read more

 

Rate and indices

European Bank Base Rate and Euribor
The 3-month Euribor continues to head south, now dropping below the -0.110 mark. The vast majority of all French mortgages use the 3-month Euribor as their reference index with a margin added on top. Current margins are in the region of 2% over the 3 month Euribor.

french rates mortgage

Fixed rate mortgages: The TEC 10 index

The Tec 10 continues to drop and is now at around the same level it was at the start of this year. The TEC 10 index in France gives an indication of how much the French government is charged to borrow money on a 10-year basis. In this way it is also an indicator of economic confidence and the perceived outlook for growth. Movements in the TEC 10 often produce changes in the available fixed rate mortgages in France. These changes are not instant and usually take a few weeks to come into effect.

french mortgage rates

Currency Rates vs Euro

The European economic picture was muddled before the likely impact of the Paris terrorist attacks.

Near term risks to the German economy remain exactly what you think they are; export softness in a world where aggregate demand remains uncertain and a consumer base happier to save gains afforded to them via stagnant inflation levels than spend them. France’s picture is a lot more muddled and it remains to be seen whether this bright spot in growth can be sustained.

In the very near term and viewing both of these announcements through the eyes of a market hopped on stimulus expectations like a sugar-crazed 4 year old, there is little to smooth out thoughts of an increase in asset purchases or a deposit rate cut at the European Central Bank’s meeting on December 3rd and a weaker euro as a result.

Currency

1 GBP€1.42
1 USD€0.91
1 AUD€0.66
French-Private-Finance-World-First

The French property market continues to rebound

The market for resale properties in France would appear to be continuing to come out of the downturn. The third quarter of 2015 was particularly active.

In late September 753,000 transactions were recorded over the last twelve months, 4.2% more than last year in the same period, find the French notaries.

“The French have a little more confidence in the future. And extremely low rate mortgages continue to support the trend, “says Jacky Chapelot, deputy president of the FNAIM.

This improvement is also beginning to show within prices too. In the third quarter, they were up 0.5% from the previous three months, according to the index Notaries-INSEE. In one year, the decline eases, prices falling by 1.5% (- 1.7% for apartments and – 1.4% for houses).

“Prices move piecemeal since the third quarter. They ride in some cities such as Paris, Montpellier, Bordeaux or Toulouse, but they still fall to Marseille or Nice and many medium-sized cities,” noted Jacky Chapelot.

“The market remains difficult in the outskirts of small towns and in rural areas, where prices have often fallen from 10% to 20% and sometimes even 30%.”

The real estate recovery is particularly strong in Île-de-France. Between July and September, 46,600 homes were sold, or 25% from the third quarter of 2014.

“This corresponds to a level of activity of neighbor that found during the high period 1999-2007” indicate notaries. However, “the annual performance will be less than 14% in the boom years as the beginning of the year has been poor,” relativized Thierry Delesalle, notary in Paris.


November 2015 – French Mortgage Transaction of the Month

Whilst the 3 month euribor has remained in the negative there is a sense that rates may fall further, yet this has not stopped the appetite for the current 20 year fixed-rate mortgage product.

At 2.70% the average monthly repayment cost per £100,000 borrowed is £535, which for a product over 20 years shows huge value. This is the highlighted product for this month’s French mortgage transaction of the month.

The client from Staffordshire, England, borrowed €380,000 at a loan to value of 80% on a classic freehold apartment in Méribel in the 3 Valleys ski region of the French Alps.

The client could have borrowed less, having enough personal contribution to lower the loan to value, however with French mortgage rates so low he decided to use the additional money for a furniture pack instead.


French property price reductions slow

“The first tensions” begin to form on prices, note the French notaries in a recent post. In the third quarter, they increased by 0.8% compared to the second. In one year, their decline is now more attenuated (- 1.2% against – 2.5% the previous quarter).

Long shunned, houses have found favor with Parisians, mostly large homes (sales up 23% in the third quarter and 3.8% price since the beginning of the year).

The Paris market is also dynamic again. During the three summer months, the number of sales (9600) jumped 22% compared to the same period of 2014. The level of activity is similar here as (- 5%) of the boom years of 1997- 2007.

“The fears of a rise in mortgages rates, but also the return to flexible vendors triggered a buying event,” suggests Thierry Delesalle. The decline of the euro against the dollar has also attracted in the capital many foreign investors from “zones dollars.” Foreign buyers have also never been so many (representing 9.6% of sales).


Area Guide: Paris 16th Arrondissement

The 16th Arrondissement is associated with size; it is the largest of all the 20 Arrondissements, so large it has too postcodes (75016 and 75116), but it is also known for the size of the properties of people who live there.

More than half of the district is made up of the Bois de Boulogne, the second largest green space in the city. Just as in London, or any capital across the world, having lots of green space at the same time as being in the thick of city life puts a premium on all real estate in the area.

Its divine 19th century buildings line large avenues, many of which have their own green spaces running down the middle; the ultimate visual accessory. Prestigious schools and a quiet, calming temperament make the area a less cosmopolitan than others, but it is and has been perfect place for French high society’s family homes for countless decades.

In fact, the name ‘le 16e’ or ‘le seziem’ is now seen as a phrase that is linked to wealth and prosperity. Despite the undertones of pomp and ceremony, the general feeling of the district is one of affable calm. And in any case, it’s not actually the richest district at all, coming in behind the more central and prime 8th, 7th and 6th Arrondissements.

The quantity of green space in le 16e has made it Paris’ busiest area in terms of sporting venues. Three of the country’s most popular sporting homes are here. The Parc des Princes, home to Paris Saint-Germain football club is one of the largest, with Rolland Garros and Stade Francais. The home of the city’s professional rugby club.

Even though it’s Paris westernmost district, it still oozes touristic appeal, especially on its eastern fringes. Taking in the Arc de Triomphe, Place Victor Hugo and the striking Trocadero, which sits under the indomitable gaze of the Eiffel Tower, there is always to look forward to around each turn.


How to rent your Paris apartment legally through Airbnb

Owners wishing to rent their second home in Paris legally via Airbnb must now change its registered use into a commercial property. Often a tedious process, expensive and sometimes almost impossible to achieve some crafty investors have realised that it could be more interesting to buy an apartment already set up for this type of rental.

A Paris agent who focuses on the third and fourth arrondissements of Paris, has sensed this trend. “It is only a niche market for now, he admits, but demand is growing.”

The 3rd and 4th arrondissements of Paris is definitely one of the most popular for such properties. The neighborhood is one of the most sought on Airbnb, with more nights booked during the summer of 2014 than the people living there.

Moreover, the place has no shortage of offices, workshops and other commercial areas not necessarily installed on the ground floor.

“The Marais was a neighborhood of artisans where there are many buildings on courses that were fully leased to watchmakers, jewelers and even leather workers, says Robin Calligaris.”

Of course you have to check that the designation and assignment as a commercial premises is specified in the building regulations. And if it does, you also have to be sure there is no expression in the joint ownership agreement prohibiting the location to be used as a tourism residence.


french alps property

25-year fixes still below 3.0% but interest-only harder to come by

The non-resident market for French mortgages is in fairly good shape in the run up to the busy ski property-buying season. Availability of capital is good for repayment mortgages and a 25 year fixed rate mortgage is still less than 3% on a capital and interest basis. Variable margins on French repayment mortgages are still in the region of 1.8% to 2% and essentially that is all that you are paying now as the 3-month euribor is below 0%.

Interest-only mortgages are slightly harder to come by at the moment as French banks are continuing to lower the risk levels in their portfolio of loans. And they are especially hard to come by if you have interest only mortgages in your portfolio. French banks are more sensitive to this and may seek to offer a repayment mortgage instead. If this is not acceptable then a loan with a Private bank may be the only option, though this will require assets under management to be placed with the bank. Careful preparation and negotiation is required to get this type of loan currently, especially for amounts over a million euros.

 

img-john-Busby-French-private-finance

JOHN LUKE BUSBY
Private Clients Director

French Mortgage Best Buys
Repayment
RateDurationLTVDescription
2.05%20 years80%Tracker mortgage 3m euribor +1.9%
2.25%25 years80%Tracker mortgage 3m euribor +2.0%
2.70%25 years85%Rate capped + 1.5% for 10 years
2.70%20 years80%Rate fixed for the term
3.00%25 years80%Rate fixed for the term
3.20%25 years85%Rate fixed for the term
Interest Only
2.30%15 years70%Tracker +1.95%
2.60%15 years75%Tracker 3 month Euribor +2.55%
3.30%15 years70%Fixed rate

France in the Press

 The eurozone needs a strong French economy
Economically speaking, France is not as French as it first seems but there is a desperate need for it to embrace some structural reforms
 French Economy Picks Up as Services & Manufacturing Strengthen
French economic output picked up in October to the fastest in four months as growth in manufacturing and services accelerated.
 How France’s New Tourism Strategy is Targeting The US Market
France is seeing an upturn in tourism from the United States and has plans to attract even more travelers with new infrastructure, more attractions, regional programs and special events over the next two to three years.

Area Guide

French-mortgage-watch-area-guide-Val-dIsere

Val d’Isere

At a glance, Val d’Isere’s history is much the same as any other resort, but its roots are slightly different to most and it also has huge scope for improvement.

Read more

From the blog

Transaction of the month

This month we broke a new record! The average French mortgage loan takes around two months to go through, but this month’s French mortgage transaction of the month shows that it can actually happen in less than two weeks.

Read more

Are the French becoming less stubborn over property prices?

A new barometer of price differentials continues to suggest that French vendors are relaxing their attitudes towards property prices.

Read more

Paris Mayor to make another move against the city’s cold beds problem

When it comes to putting its accounts in balance, the mayor of Paris has big plans.

Read more

New-housing demand slows in France, but confidence remains high

After six months of strong rebounds, the improving demand for new homes has suffered a setback in the third quarter with developers reporting a slight decline.

Read more

 

Rate and indices

European Bank Base Rate and Euribor
The 3-month Euribor has remained unchanged recently, staying under 0%. The vast majority of all French mortgages use the 3-month Euribor as their reference index with a margin added on top. Current margins are in the region of 2% over the 3 month Euribor.

french private propety

Fixed rate mortgages: The TEC 10 index

The Tec 10 dropped this month and has been wavering around the 0.70%-0.80% mark. The TEC 10 index in France gives an indication of how much the French government is charged to borrow money on a 10-year basis. In this way it is also an indicator of economic confidence and the perceived outlook for growth. Movements in the TEC 10 often produce changes in the available fixed rate mortgages in France. These changes are not instant and usually take a few weeks to come into effect.

french mortgage rates

Currency Rates vs Euro

Despite a strong start to the month, the euro is on the back foot once again. Mario Draghi and the European Central Bank cranked up the pressure on the euro yesterday as part of their latest policy decision. Despite holding off on any change in interest rates or the amount of assets the central bank will purchase before September 2016, the hints suggest some form of monetary policy weaponry will be unleashed at the Bank’s next meeting on December 3rd. The European economy is growing but inflation remains low and, as long as it does, then the markets will be betting that the single currency will remain low too.

Currency

1 GBP€1.40
1 USD€0.91
1 AUD€0.65

French-Private-Finance-World-First


October 2015 – French Mortgage Transaction of the Month

This month we broke a new record! The average French mortgage loan takes around two months to go through, but this month’s French mortgage transaction of the month shows that it can actually happen in less than two weeks.

Now we will admit that the loan to value was lower than normal – at around 35% – but the speed at which this variable interest only loan (at 2.30%) was secured was mostly to do with the efficiency applied to the paperwork.

After having received their decision in principle, the client’s required documents were supplied to us quickly (almost in a matter of hours) thus enabling us to move very swiftly on the full application.

For further information on the French Mortgage Process please follow this link or alternatively speak to one of our advisers.


Paris Mayor to make another move against the city’s cold beds problem

When it comes to putting its accounts in balance, it seems Paris will stop at nothing. According to information from Capital.fr, the Mayor of Paris, Anne Hidalgo, would like to go even further to curtail the city’s problem of cold beds (furnished second homes that are not rented on either a short or long term basis).

In the last seven months Hidalgo has already raised the tax on such homes by a staggering 20% and will soon propose further ideas at the forthcoming budget policy debate.

“If the Council of Paris deems it a valid principle, a study will be launched, and then we will meet the government to see to what extent an amendment allowing communities to raise the tax rate can be included in the Budget,” she explains. Even if it has not yet been confirmed, this “principle” may well make some noise in the industry.

But what sort of increase could we expect? Put in effect from this year, the 20% surcharge on second homes was designed to encourage owners of vacant property to sell or to put them on the rental market of rental. Most think that this has had no effect, so it is possible that an increase of 30% to 40% could be on the cards.

Of course the real issue may not be the amount of tax itself, rather who is allowed to impose it. Figures from earlier this year show that only 98 municipalities out of a possible 1200 across France chose to apply the 20% increase in council tax for such properties.


Area guide: Val d’Isere

At a glance, Val d’Isere’s history is much the same as any other resort. A once remote farming village surrounded by a lush snow-filled bowl, becomes a magnet for people strapping waxed wooden planks to their legs thanks to an injection of money from a wealthy european family…

Yet where Megève had the wealthy Rothschilds, Val d’Isere had a well-off Parisian called Jacques Mouflier. What Mouflier lacked in finance, her certainly made up for in spirit and enthusiasm. He found Val d’Isere whilst on holiday from Paris in 1929 and set about convincing locals of its potential.

By 1932 the Hotel de Paris had opened and 4 years later so did the resort’s first drag lift, right on the now world-famous Solaise slopes. And whilst the resort has grown exponentially since then, at its heart still lies the beautiful 17th century church.

A mecca for seasonaires and western snow enthusiasts of all types, Val d’Isere is today a vibrant place. From December to April it teems with British, northern european and a few French families who all enjoy a surprisingly strong village atmosphere considering it’s size. Celebs are often spotted here too, many British but some others as well, most notably Arnold Schwarzenegger, who was last season rumoured to be buying a chalet in the Legettaz area.

Numbers-wise, the resort stacks up against the best. Part of the Espace Killy ski domain it has 300km of piste served by 87 lifts. With the appropriate ski pass you can also ski in the neighbouring domain of Tignes.

With skiing above 2500m snow is pretty much guaranteed throughout the season and after last December’s early flurry of snow some pistes were open before Christmas, with a little help from artificial cannons.

It’s going to get better too. This summer work started on a two year multi-million euro project to redevelop the top of the Solaise slopes thus reducing the gradient of the slope from 16% to 7%. There will be a new snow-tubing course, visitors centre, high-speed gondala and free wifi.


New-housing demand slows in France, but confidence remains high

After six months of strong rebounds, the improving demand for new homes has suffered a setback in the third quarter with developers reporting a slight decline, according to a quarterly survey released Tuesday by Insee.

New home starts dropped a little by 0.7% to 75,900, according to figures released Wednesday by the Ministry of Housing. However developers are reporting a decline in their stock of unsold homes, which is a positive yardstick for the market.

Building permits for new housing are in the green for the second consecutive month, with an increase of 2.3% to 98,700, almost identical to that posted in late August. With the number of building permits beginning to increase, there is a positive outlook for housing starts next year and this will hopefully continue the gradual recovery of the market.

In the first half of 2015 sales of new homes rose 19% year on year (+16% for individual new-build homes), says a study by Credit Agricole. Sales of existing properties also increased (+ 10% in the first eight months of the year). Prices have dropped around 2% year on year, which continues to affect the fluidity of the market.

Even with French mortgage rates holding their ground at 2.70% fixed for 20 years for the average, real estate remains affected by negative economic factors, such as low growth, high unemployment, the impact of fiscal measures. Yet despite these overarching negative sentiments, properties in key prime and touristic areas of France will remain the country’s best performers.

 


Are the French becoming less stubborn over property prices?

A new barometer of price differentials, launched in April by the Orpi network in partnership with Le Figaro and real estate Explorimmo, continues to suggest that French vendors are relaxing their property prices. The indicator measures the difference between the actual sale price of an apartment or a house and the listing price.

At the national level, the gap between selling and listing price fell to 4.5% against 4.55% this summer and 4.74% in April. To September 2015 the average selling price across France was €200,425, after being placed on the market for an average of €200,860. One bedroom prices have held the ground with a price differential of 3.95% against 4.9% for the four bedroom.

Whilst these differentials seem marginal, when you compare them to years gone by the gap is big. Around two years ago selling prices could be 15% less than the listing price, but now the margins are limited. And this is largely down to a shortening of the transaction process.

In 2014 it took on average 120 days to finalise a sale, but the deadline has now dropped to 70 days for apartments and 80 days for homes. But perhaps it’s more down to simple pricing, with sellers now understanding that by putting their home on at the right price they will sell faster.

Although the average margin is 4.5% nationally, and seems low, it is substantially lower in some cities. The capital, often an exception, has a gap of 2.6% but Lyon who holds the record for the tightest margin: only 2.4% on average and just 2% for 3 bedroom properties. Elsewhere, the figures rise. Nantes has a big gap of 6.3% but the highest is in Béziers with 10.9%.


french alps property

French market settles into record-breaking year as Fed holds rates

The French mortgage market remains in very good shape going into the busy run up to Christmas. The recent high profile hold of interest rates by the US Federal Reserve has revealed that the recovery will continue at the same pace for a while longer.

So the status quo remains. France remains a good target for buyers due to the relatively cheap cost to buy euros and the ultra low interest rates. Whilst any upward movement in interest rates by the Fed or Bank of England will only make French property cheaper to foreign buyers, such a prospect has not caused investors to readopt the wait-and-see approach of 2010-2011. If anything it has done the opposite, reminding them of the great market conditions that have led 2015 to be a record year for non-residents buying in France. Our own figures showing a 50% increase on the amount financed for the year to date, with a 40% increase in the average loan amount to over €450,000.

 

img-john-Busby-French-private-finance

JOHN LUKE BUSBY
Private Clients Director

French Mortgage Best Buys
Repayment
RateDurationLTVDescription
2.05%20 years80%Tracker mortgage 3m euribor +1.9%
2.25%25 years80%Tracker mortgage 3m euribor +2.0%
2.70%25 years85%Rate capped + 1.5% for 10 years
2.70%20 years80%Rate fixed for the term
3.00%25 years80%Rate fixed for the term
3.20%25 years85%Rate fixed for the term
Interest Only
2.30%15 years70%Tracker +1.95%
2.60%15 years75%Tracker 3 month Euribor +2.55%
3.30%15 years70%Fixed rate

France in the Press

 France economy likely to rebound in Q3
A surprising rally of confidence in the manufacturing and service sectors set a potential rebound for the next quarter.
 France committed to economic reforms – finance minister
France is committed to continuing and increasing its reform policies to support growth and employment in the country, Finance Minister Michel Sapin said.
 French ski resorts welcomed the most guests last season
With an average of 53.9 million skier-days sold during the 2014/2015 season, France took 1st place in the global ranking of ski areas, just above USA.

Area Guide


Paris 13th Arrondissement

From a diseased slum given the number 13 because no one would care, to an architecturally iconic destination attracting a cosmopolitan population, the 13th Arrondissement of Paris has seen it all, and so can you.
Read more

From the blog

Transaction of the month

September’s transaction of the month is on a new-build ski apartment in Chatel, with the buyer taking a loan of €450,000 (on the nose of our average loan amount so far this year).

Read more
French property buyers are back

Encouraged by falling prices and attractive mortgage rates, investors are returning to French bricks and mortar.

Read more

On the up – how to beat a rising French mortgage market

After what has been almost three years of continual drops, French mortgage rates have started to rise again, but there are still ways of finding market beating rates.

Read more

French Mortgage Q & A – How to pay off a French mortgage

How to go about paying off the outstanding amount on a French mortgage is one of our most commonly asked questions. We were recently asked to provide a response to someone who wrote in to Living France Magazine on this subject.

Read more

 

Rate and indices

European Bank Base Rate and Euribor
The 3-month Euribor rallied a little towards the end of September to around the 0.041% mark, the highest it’s been since February this year. The vast majority of all French mortgages use the 3-month Euribor as their reference index with a margin added on top. Current margins are in the region of 2% over the 3 month Euribor.

french alps mortgages

Fixed rate mortgages: The TEC 10 index

The Tec 10 has been hovering around 1.0% since May, after rallying from the March lows. The TEC 10 index in France gives an indication of how much the French government is charged to borrow money on a 10-year basis. In this way it is also an indicator of economic confidence and the perceived outlook for growth. Movements in the TEC 10 often produce changes in the available fixed rate mortgages in France. These changes are not instant and usually take a few weeks to come into effect.

mortgage rates in france

Currency Rates vs Euro

Movements in China saw the Euro make quick gains on both sterling and the dollar and whilst the China crisis seems to have receded slightly, it remains to be seen what long term effects, if any, there will be on the euro. The only thing that can be strongly considered is that the Fed and Bank of England will push back their proposed interest rate hikes, perhaps by a few months, which may provide stability to currencies in the mid-term.

Currency

1 GBP€1.35
1 USD€0.89
1 AUD€0.62

French-Private-Finance-World-First