“Banking error in your favour” is something Monopoly players hear again and again. Now a growing number of people taking advantage the error made in the banking system which is now means the ultra-low rates often make it worthwhile for people to refinance their loan in France.
Although the drop to these low rates has not been enough to revive the real estate market, it does represent a real source of oxygen for consumers and a boost to purchasing power. Renegotiating your mortgage in France now seems like a necessity for a large number of borrowers who are not hesitating to bite the bullet. In January, they have been almost 20000 applications for mortgage refinancing according to one of the large brokers in France.
Re-mortgaging is a boon to those borrowers who signed up for a mortgage few years ago when rates were higher, who can now also benefit of current low level rates. People re-financing their mortgages can use the current French mortgage best buys for normal purchase as there is no premium placed on these types of products. As there are some costs involved in re-financing a loan it is important that the loan amount is more than €100k and the difference between the interest rates is 1%. On a 20 year loan someone who lowered their interest rate by 1% over 20 years on a €100k loan would save in the region of €13k. The costs for the change would be 1% for the bank and 1.5% for the mortgage registration tax so approximately a €10k saving after costs per €100k borrowed.