12 September 2012 - French Mortgage News | Partners News | Uncategorized |
French Mortgage Update
With French mortgage rates continuing to fall and the euro having weakened over the course of the year, certain broad economic trends are working in favour of international buyers of French property.
The year 2012 has proved to be a turbulent time both politically and economically for France, with the market uncertainty resulting from the eurozone debt crisis being compounded in June by the formation of a new government under socialist president Francois Hollande.
While all of this has been going on, a number of factors continue to attract international buyers to make new acquisitions in France, and interest in French property has remained strong. Indeed, the main deliberation among international buyers tends to be over the exact timing of making the purchase itself.
Firstly, the euro has steadily weakened against other major international currencies since the turn of the year. Having dropped to around 1.28 against the British pound, and around 1.22 against the US dollar, the weakening euro only results in French properties becoming cheaper for international investors.
French mortgage rates have also decreased. The majority of these rates are pegged to the Euribor index, which has fallen to its historic lows as a result of the European Central Bank’s decision to cut rates in order to stimulate growth across the region.
The Euribor three month rate – on which most French variable rate mortgages are priced – has fallen from 1.343% at the beginning of 2012, to 0.261% on 10th September.
Meanwhile, for those worrying about the very future of the eurozone itself, many market commentators have suggested that last week’s decision by the ECB to sanction unlimited bond buying to suppress borrowing costs of some eurozone members may be the commitment that initiates the first step towards bringing an end to the eurozone debt crisis. Thursday’s ratification by the German Federal court of the Eurozone’s European Stability Mechanism seems to reinforce this view.
While undoubtedly challenges remain, improving economic trends and the allure of France for International property buyers and holiday makers alike continue to encourage optimism for the future.
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