Record low French mortgage rates…continued

Since late 2011 mortgage rates in France have fallen by 1.63%, accordingly the latest figures published by Crédit Logement.

In December 2014, French mortgage rates declined further with domestic buyers borrowing at a rate of 2.36% on average (excluding insurance), according to Crédit Logement / CSA.

Before now, these rates are simply unheard of and the borrowing rates themselves have lengthened since spring

The fall to 2.36% was down from 2.38% a month earlier and down a lot further from December 2013 (3.08%).

“After a year of decline, it has never been as cheap to borrow at fixed rates on all maturities,” said a domestic mortgage broker.

Today, the average household borrowing (excluding insurance) rates for domestic buyers are 1.74% over 10 years, 2.07% over 15 years, 2.29% over 20 years and 2.74% over 25 years.

French with with a strong financial record (personal contribution, higher income …) are able to obtain more favorable agreements, sometimes less than 2% over 20 years!

The year 2014 was particularly good for borrowers. In one year, credit rates have melted 0.72% according to the Observatory Credit Housing. A decline linked “to lower resource costs and willingness of banks to support the real estate market.”

Since late 2011, mortgage rates granted to finance an existing property fell by 1.63% notes Crédit Logement. “This equates to a price decrease of 15.1%,” says the study.

Fewer personal loans in 2014

Low lending rates also allowed banks to extend loan durations, meaning less new loans were taken out.

Banks are also placing more and more loans over 25 years. The level of personal contribution has shrunk by 4.2% year on year, following a decline of 5.5% in 2013.

“These are young families who benefit most from this trend: the movement of degradation flow of first time buyers that was observed since autumn 2011 was halted, “said the Observatory.

“However the cost of operations remains relatively high, accounting for 3.76 years of income, in a context of slow erosion of household income” (-0.1% year on year, after 0.3% in 2013), ” the study finds.

Despite sustained year-end, the number of mortgages granted by banks fell by 5.8% in 2014 compared to 2013. But given the historical weakness of the OAT 10-year rate, borrowers surely still have a bright future ahead of them.