Mortgage rates reach historic low
PUBLISHED: 15:24 24 May 2013 | UPDATED: 15:24 24 May 2013
Vicky Leigh shares the low-down on the latest mortgages rates
Mortgage rates available to British buyers of property in France have reached their lowest level for almost 70 years.
A decline in the number of transactions and the ongoing economic concerns across Europe have prompted lenders to make significant cuts, helping mortgage rates to reach historic lows. The best deal on a 20-year fixed-rate mortgage is now 3.35%, and 2% on a 30-year tracker mortgage. These rates are 0.25% below previous lows, last seen at the end of World War II.
“These rate decreases point to the sharp competition in France on the domestic market. There are fewer clients, so there is pressure to compete on rates for the best clients buying the best property,” comments John Busby of French Private Finance. “I certainly think these rates will attract buyers to the market. However I also think that a real upturn in the numbers of international buyers will be seen once the pound improves past 1.25 again.”
Combined with the current trend of falling house prices across the Channel, many experts have declared that conditions are currently ideal for a French property purchase.
“Now is certainly one of the best moments for those seeking to buy a property in France,” observes John Busby. “The combination of ultra low rates and soft property prices mean that there are extremely good deals to be had.”
The latest French property market report from Notaires de France also agrees that this could be the year to buy. The report notes an easing of credit conditions on the part of the banks and that there are no signs of interest rates rising in the near term, with the result being that the fall in the volume of property loans is apparently drawing to a close. It also notes that lenders will need to adjust their prices to match the solvency levels of buyers. This adjustment already seems to be underway, based on the data obtained from the processing of pre-contracts, which anticipate market trends by approximately three months.
“Not only does France currently offer UK buyers the widest range of finance options in Europe for overseas property, it also offers the lowest available mortgage rates,” says Clare Nessling, director at overseas mortgage provider Conti. “Affordability for UK buyers has also been boosted by lower property prices. Due to the slower market, there are many motivated vendors who are open to lower offers.”
Busby also notes that the low rates are attracting the attention of investors, who can see the value of locking them in for long-term investments. He cites the example of a new-build development of 91 units in the Alps that has almost sold out in the past two months.
“The low mortgage rates currently available are certainly helping the French property market at the moment,” says Richard Deans of Alpine developer MGM French Properties. “We have recently been seeing an increase in the number of buyers intending to proceed with a cash purchase, but on discovering how low the interest rates are, they have changed their minds and decided to take advantage of them.”
Athena Advisors has recently reported an end-of-season trend for ski property that hasn’t happened for some time. Athena’s new collection of luxury bespoke chalets in Val d’Isère is proving to be particularly popular with a diverse mix of European investors.