Outlook good for 2011

French mortgages 2

The Euribor 3 month, which is the index used to price billions of Euros of variable interest rate non-resident mortgages, has risen 30% in the last 6 months and now stands at 1.030%, just above and in the normal pre-crisis range of the benchmark European Central bank rate of 1%.

The Tec 10 index, which is used to price the majority of French fixed rate loans, has risen 20% to 3.12% since the end of August, perhaps heralding the beginning of the end of these historically low interest rates.

The general outlook for rates on French mortgages looks good for 2011 especially in Q1. You can still get a 25-year fixed rate at 3.8% or 3.5% over 15 years at 80% of the purchase price, which in UK terms is still phenomenal. Tracker mortgages on the 3 month Euribor for an 80% mortgage start at 2.35% on a 25-year term. At 100% LTV you can get a rate of 3.10% which can never increase past 5.10% over a 25-year period.

However you look at it, the opportunity – given the current set buying conditions in France for UK purchasers – cannot be underestimated.