French mortgage specialist French Private Finance said it has seen a sharp rise in the number of enquiries in recent weeks and it predicts that the rest of the year promises to be even better as fixed rate are expected to fall even further.
It has launched a range of long term fixed rate deals available nationally, with 15 year fixed rates from 3.6%, 20 year fixed rates from 3.7%, and 25 year fixed rates from 3.9%, all at 80% LTV.
Director John Busby pointed out that existing borrowers will benefit too because as banks borrow at these all time low rates loans will get cheaper.
The reason for these record low fixed rates has been the downward pressure on the TEC10 index, the benchmark index against which French fixed rates are calculated, due to a combination the recent change of government and the economic outlook forcing investors to seek the safe haven of government bonds.
Indeed, the TEC10 index has been steadily falling since the beginning of the month and reached an all time low of 2.1% today (Wednesday, 18 July 2012), compared with 2.6% on 24 August 2010.
In addition, the three month Euribor, the European Interbank offered rate, on which most French variable mortgages are based has also hit its lowest point since the creation of the Eurozone standing today 0.47% down from the previous low of 0.63% in April 2010.
It means that 25 year lifetime tracker rates are available from 2.6%. French bank margins are higher than in 2010 meaning that existing borrowers will be happiest with this fall in the rate.
‘France is in a historically low interest rate environment at the moment with average fixed rate mortgages at levels not seen since the end of 2005 and more recently in August 2010. At that time though the TEC10 index was well above 2.5%. Now with the TEC10 at 2.1% and predicted to fall even further in the coming weeks, average fixed rates could well hit record again next month. When rates are at these levels banks can refinance their long term borrowing and in theory pass these rates on to borrowers,’ explained Busby.
‘With fixed rates falling, we have seen a noticeable shift in the types of mortgages people are ringing to discuss. Fixed rates are now increasing in popularity amongst buyers as, although no one can see interest rates increasing in the short term, the peace of mind and certainty brought about by these long term products is outstanding,’ he said.
‘For UK investors looking for a safe, long term investment, second home buyers or people looking to relocate to France, this is an excellent time to purchase French property. Borrowing conditions are as good as they’ve ever been, and with property prices soft and a pound 10% stronger than in 2010, UK buyers have a great opportunity to pick up a property at rock-bottom prices and fix monthly payments for 20 plus years at fantastic rates,’ he added.
