The continuing decline in interest rates is allowing the French to buy additional square meters without spending more money.
But when will interest rates stop falling? The latest figures show that that credit conditions are more favourable than ever for French buyers, and also therefore for non-resident buyers. “The all time lowest rate continues to be beaten,” says John Busby of French Private Finance. In August, the fixed rate on average 20 years reached 2.59%, and the lowest rate negotiated by a broker to a domestic buyer appears to be 2.45%.
Despite this very favourable context for borrowers, the market is slowing. Transaction levels are up 12% on last year according to the Notaires, but that’s still below 2012 figures. The market is still tight and hesitant would-be vendors are holding to their estimates, which is keeping the market quite tight.
But things are improving, largely because buyers have access to more funds and can therefore afford more. The combination of rate cuts and price softening allows purchasers to make their money work harder for them.
But remember to calculate the affordability
On face value interest rates are exceptionally low, but buyers must not forget that they are part of the context of inflation, which is also very low. According to the latest figures released by Eurosat the euro zone in July was up 0.4% year on year, the lowest level recorded over the last five years. Therefore, in actual rates, that is to say for inflation, loans made to individuals are actually not that cheap.