Rates still very low but some banks raising margins again

This month has seen some of the lowest rates we have ever had on offer. 20 year fixed rates under 4% and lifetime tracker mortgages under 3% are widely available and accessible to non-residents. The vast majority of banks are passing on all the reductions seen in the main indicator rates with only a few starting to raise their margins again. The reasons given for the average increases of 0.30% in the margins are internal pressures and rising costs of borrowing brought about by the further reductions in the credit ratings of several French banks by Moody’s and other ratings agencies.

For the time being, rates are extremely low and represent excellent value, though we are not sure how long it will be before the pressure of increasing costs forces other banks to raise margins again.

The last time the main fixed rate indicator index, called the TEC 10*, reached this level was in September 2010 when it reached 2.60%. In April of that year, the three month euribor, on which the vast majority of variable rate mortgages in France are based, stood at 0.64% with the best available rates being a 20 year fixed rate at 3.50% or a variable mortgage at a little 2.6%. In May this year, the Tec 10 now stands under its previous low at an historic 2.39% and the three month euribor is at 0.67% just a touch over its all-time low. The best buys are now a 20 year fixed rate at 4% and variable trackers from 2.8%.