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.
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
|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.|
|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.
|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.
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.
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.
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.