Property: low French mortgage rates finally helping the young

Whilst falling French mortgage rates are helping non-residents worldwide to lock in huge amounts of value on their dream French home, the cheap lending and improved accessibility is now finally enabling France’s younger generations to get their foot on the property ladder.

French mortgage rates have continued to fall throughout 2014 and are now at levels, which are virtually unknown. This month, French borrowers can access lending on averages of 2.52% on average (excluding insurance after 2.59% in September) for 17.4 years, according to the Observatory Crédit Logement / CSA.

Since the beginning of the year, rates have fallen by 0.49% on average and 0.6% for loans of 15 and 20 years. As a result, almost all home loans (98.1%) are sold at a lower rate to 3.5% (against 16.6% in 2011!). “No public incentive or marketing initiative is as powerful to boost the economy and support the housing market,” the study said.

However, not all borrowers are in the same boat. The rates offered by banks depend on the duration of the debt. Individuals borrow an average of 2.43% (excluding insurance) over 15 years and 2.72% over 20 years (2.22% variable rate over 20 years).

Of course, interest rates fall further for households with a strong capital and good repayment capacity; they can borrow at a fixed rate over 20 years at 2.41% or 1.78% (still over 20 years) on a variable floating rate.

With new-build developments, banks lend again yet for somewhat longer periods, with increased availability of loans over 25 years especially. These loans represented 19.3% of the credit market in September, against 15% in the first quarter.

These good credit conditions finally allow a greater number of young households (albeit still modest increase) to own their first home. “Credit conditions are likely to remain very good until the summer or fall 2015″ concludes the study of Crédit Logement / CSA.