Despite the lack of movement in the European Central Bank which has remained stable at 0.75% for the past eight months, French banks have decreased both their rates and margins as competition for the best clients heats up. Non-residents can also access these historically low rates with a 20 year fixed rate now standing at 3.35% and a 20 year tracker mortgages from 2%.
The current rates on offer are 0.25% below previous lows which were last seen at the end of WWII. The cost for a €100,000 loan has now dropped to €572 per month for a fixed rate over 20 years and €502 per month for a variable rate at 2%. These new rates are certainly attracting the attention of investors who can see the value of locking in these rates for long term investments. One new build development in the Alps with 91 units has almost sold out in the past two months.
If you strip out the inflation element which is currently 1% , then the current variable rates are effectively at 1% and fixed rates at 2.35% in real terms. However you look at it, this is incredibly cheap money.
Aside from the competition element which has encouraged banks to lower their margins by approximately 10%, there has also been a drop in the rate for borrowing long term money. The indicator for long term money is called the TEC 10 which has dropped by over 0.50% in the last month standing at 1.73 on the 8th of April. Some experts relate this drop to the asset purchasing QE occurring in Japan which means that investors are putting more money into the debt of other countries, thus lowing the rate on offer.
Now is certainly one of the best moments for those seeking to buy a property in France. The combination of ultra-low rates and soft property prices mean that there are extremely good deals to be had.