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.
JOHN LUKE BUSBY
Private Clients Director
|French Mortgage Best Buys|
|2.05%||20 years||80%||Tracker mortgage 3m euribor +1.9%|
|2.25%||25 years||80%||Tracker mortgage 3m euribor +2.0%|
|2.70%||25 years||85%||Rate capped + 1.5% for 10 years|
|2.70%||20 years||80%||Rate fixed for the term|
|3.00%||25 years||80%||Rate fixed for the term|
|3.20%||25 years||85%||Rate fixed for the term|
|2.30%||15 years||70%||Tracker +1.95%|
|2.60%||15 years||75%||Tracker 3 month Euribor +2.55%|
|3.30%||15 years||70%||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.|
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).
|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.
|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.
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.
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.
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.