French mortgage rates drop to 100-year lows – now ‘€58,000 cheaper’ than in 2014

French mortgage fixed rates have just dropped below 2.0% for the first time in 100 years. The value you can now lock in on a long-term fixed rate repayment mortgage is unprecedented for modern times.

Rates for a 20-year repayment mortgage with a loan-to-value of 80% have crashed to 1.85% fixed for the duration of the loan. This is available to the majority of non-residents buying across France, with some localised rates going even lower. This means that, with a modest rental yield of 3-4%, international buyers can more than cover their interest payments and also pay down some of the capital too.

For British buyers, this dramatic drop in rates offsets the change in exchange rate with today’s GBP/EUR rate only circa 5% below that of two years ago. Mortgage rates have dropped from 3.10% in September 2014 to 1.85% today. This means that the interest payable over a 20 year term has fallen by 42% in the same period.

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On an average loan of €400,000 current buyers are saving just over €39,000 in interest payments over the course of a 20 year fixed rate mortgage on a loan-to-value of 80%, which is roughly €10,000 per every €100,000 borrowed. People who were previously buying in cash are now using finance to manage the loss in currency values, hedging against future exchange rate movement.

On the whole, these rates are underpinning British demand in France, especially in key locations like the Alps and Paris. For buyers using USD, the French market is currently even more attractive, with the perfect combination of ultra low interest rates and a very favourable currency creating incredible buying conditions. Staple areas like Paris and the big towns along France’s south coast are being targeted heavily by those buying with the dollar.