| If you are having trouble viewing this page view the online version here |
NO.02 23 MAR.2010 |
 |
| |
Conflicting messages in the French mortgage market.
Have we reached the bottom?
This month has seen some banks raising margins for non resident French mortgages, whilst others have lowered their rates, indicating some uncertainty in the short term. By comparison, in the resident market for mortgages in France, rates are still falling for both fixed and variable rate mortgages indicating competition for borrowers as the European central bank rate has not changed for many months. Stability is returning to the French housing market, with the average property prices up 0.6% in February, apartments up 1.4% and houses stable at -0.2% according to the FNAIM. What seems clear is that with any improvement in economic sentiment in the EU, French mortgage rates will begin to climb. |
| Mortgages rates |
Mortgages type |
Rate type |
Duration (years) |
| 15 |
20 |
25 |
30 |
| Capital and
Interest |
Fixed |
3.80% |
4.00% |
4.15% |
/ |
| Variable |
1.96% |
1.96% |
2.01% |
2.60% |
| Average cost per 100k per month |
€681 |
€553 |
€475 |
€400 |
| Interest Only |
Fixed |
5.45% |
/ |
/ |
/ |
| Variable |
3.10% |
3.10% |
3.10% |
/ |
| Average cost per 100k per month |
€355 |
€258 |
€258 |
/ |
|
>> See complete list |
|
| French market trends |
| |
Average loan rates |
3.05% |
 |
| |
Average bank margin |
1.8% |
 |
| |
Average house price |
-2.8%* |
|
| |
French inflation rate |
1.3% |
|
| |
ECB base rate |
1% |
|
| |
3 month Euribor |
0.64% |
|
| Change based on previous monthly rate |
| Currency Watch |
| Currency |
/EUR |
 |
1 GBP |
1.10 |
|
 |
1 USD |
0.74 |
 |
 |
1 AUD |
0.67 |
|
 |
1 JPY |
0.008 |
|
 |
|
| French mortgage market trends |
Changes to the rules for French life assurance
Many international buyers of French property are surprised to find that life assurance is compulsory for all French mortgages. Even more surprising is that the majority of French banks only allow applicants to use the life assurance recommended by the bank. However, this seems set to change with the Lagarde Reform which is currently going through the French legislative process. The main provision of this project lies in Article 17 which amends Article L. 312-9 of the Consumer Code as follows: "A lender may not refuse to secure another loan insurance contract when the contract has a level of security equivalent to the insurance contract that offers". Other amendments are also being proposed to strengthen consumer rights in this regard and the changes are expected to come into force on the 12th May 2010. This shake up should bring in more competition which is long overdue within the market with some insurance brokers saying that insurances costs may go down by over 50%. Typical insurance costs for a French mortgage are €30 per month per €100,000 borrowed.
For further detail on this and other market trends please visit our blog http://athenamortgages.blogspot.com/. |
| Buy of the month |
 |
Purchase of a classic French <<Maison de caractère>>.
Emily, from London, fell in love with a presbytery renovation project in the middle of France in an area she knows well with a purchase price of €85,000.
Emily chose a 25 year fixed rate at 4.35% through Athena Mortgages for this her first ever purchase, putting down €25,000 to cover deposit of €17,000, purchase taxes of €6,400 and fees of €1,600.
Her monthly payments for the mortgage €69,840 are €388 with life assurance payments of €17.
Long term fixed rates like this are common in France. It is important to note that there are always early repayment penalties for fixed rates which are usually half the interest rate on any sum you pay off early.
| Recommend to a friend | Best buys | Contact us | |
|
|
|
|