Property loan rates in France drops to lowest level in 60 years

 
One of the reasons rates are now so low is that the interest rate on long term government debt is at its lowest level for 200 years, according to French specialists Athena Mortgages.
 
‘Quite simply, the cost of borrowing money in France has never been this cheap or secure for such a large number of people before,’ said director John Busby.
 
He also believes that potential buyers should not become too fixed on exchange rates. ‘The euro may be strong now, but the fact that you can access near 100% funding means that it does not matter what the exchange rate is. The long term value of low rates, combined with low property prices, far outweighs any currency considerations,’ he said.
 
‘You can always buy Euros when the timing is right and your home currency is strong against the Euro. You can’t always buy property near the bottom of the market with historically ultra low interest rates,’ he explained.
 
‘As the French market has fixed rates for the term of the mortgage as well as a wide range of capped products, you can limit your exposure to future rate rises and lock in long term value,’ Busby added.
 
Looking head there is a chance that some banks will start raising their fixed rates in early November by up to 0.2%, the company believes. ‘Now is the time to try to secure an ultra low rate,’ said Busby.
 In its latest outlook report Athena also points out that recent figures show that the transaction numbers are increasing in France, providing a knock on effect on French house prices. The number of transactions annually stood at around 800,000 or more for the five years preceding 2007, before sales numbers across France began to fall.
 
The main reason for these falls was a combination of very high interest rates and inflation just prior to the financial crisis and the collapse of confidence thereafter. This continued until the middle of 2009, when annual transaction numbers stood at just over 550,000. It is no surprise that as mortgage finance became more affordable, and the end of the world didn’t materialise, people were drawn back to the market, especially as in some cases buying was cheaper than renting.
 
Since middle of 2009, the number of completed house purchases in France has risen by around 100,000 per year. The figure now stands at just under 650,000 with the v-shaped recovery continuing. House prices have followed more or less exactly the same trend, with middle of 2009 seeing prices start to rise again, and this upward trend has continued.
 
‘While transaction levels remain below their peak, bargains and discounts will still be possible to find but these will become rarer as the market picks up again,’ it says.