Outlook good for low mortgage rates in France

With the reaction on the FTSE today to Mervyn King’s announcement that mortgages rates look certain to stay low in the UK despite a coming spike in inflation, the outlook for low mortgage rates in France. Fortis bank announced today that it was selling bonds covered by ECB collateral bring liquidity to the market again. Two other major French banks also announced that they were also using mortgage backed collateral to raise further finance into an increasingly competitive market for mortgages in France. We have noticed several banks dropping the margins over the Euribor for variable rate mortgages in France in the past few months with many lenders now back to margins below 2% having dropped the margins by 20% or more.

Low rates and the availability of up 100% finance for French home loans provide those with good levels of income to secure a French property despite the strength of the Euro. We have seen continued growth in the numbers of enquiries over the last month with a further increase of 15% in the number of people applying for a mortgage in France through Athena Mortgages. We can offer a good snapshot on potential new loan offers and rates from the major and niche lenders in France. Our service levels are excellent and our brokers professional and friendly, helping all those who apply with us an excellent package for properties in France. The best way to find out what is happening in the France mortgage market is to talk to one of our brokers and for those looking for the current best buys for French mortgages can find them here. Best buys for Mortgages in France for leasebacks, second homes, buy to lets and equity release.

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French mortgage best buys for mortgages in France

Finding the best buys for mortgages in France can take some time. Is it best to go for a bank near to the location you are buying in or is it better to search for the best buys with a French mortgage broker? The answer probably is a combination and depends partly on the time you have available to commit to finding the best buy and the level of you spoken and written French. The main problem with dealing with local French banks is that the majority are not equipped to deal with an English speaking customer, just as you might say the local branch of Bristol and West does not have multi-lingual speaking customer services to service buyers from France or Russia. By comparison a French mortgage broker with the right connections can provide the services of personal French banker who speaks English for the princely sum of €44 per year as well as handling all the necessary paper work for you to obtain the French mortgage you have selected.

Athena Mortgages offers a free best buys comparison table which helps you to see at a glance some of the best buys for second home mortgages in France, best buys for leaseback mortgages in France, best buys for buy to let mortgages in France and best buys for equity release mortgages in France. This comparison table offers much more than the usual short synopsis found on other sites at it includes notes on the how the mortgage product works and early repayment charges meaning you can review some of the best options fully. The table can be found here at French mortgage best buys for mortgages in France.

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ECB keeps rates on hold at 1%

Another month, another hold by the ECB who do not feel that the Economy is in a good enough state for the various stimulus measures to start being withdrawn. he does want EU governments to get their books and order and to plan an exit strategy from the recession. Clearly the noises here are the beginnings of the upturn from where I'm standing. It may take a few more months but the signs are that confidence with blossom in the spring with the majority of the EU economies growing again.

It does not seem like the economies will really take off, especially with unemployment still rising and EU unemployment predicted to rise to 10% in 2010. These times will prove a struggle for many but the fact remains that a large percentage of society will pass through this 'economic crisis' without suffering any impact on their lifestyle or net financial position. Those in that position in fact have an opportunity to take advantage of the historically low French mortgage interest rates to invest in material assets which will be a good place to have equity if the anticipated inflation from the quantitative easing filters through in the next few years.

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Why buy French property now?

Ok, I know it seems like we might be a bit biased given that we spend our time arranging finance for second homes and investment properties in France but I genuinely think it is a great time to be buying property in France.

Let's look at what's going on. ...

Interest rates at historic lows, so it won't be getting any cheaper to finance

Discounts available on properties in some areas, good time to buy to maximise returns

100% French loans available, no need to worry about strength of Euro for currency exchange.

During a long chat with a journalist today, I convinced myself now really is a great time, perhaps another golden time for getting finance in France and snapping up undervalued French assets. One of the main reasons people are put off from going for a property in France is that the Euro is strong. For example a 30% (€60k) deposit on a €200k property costs £54k@ the current exchange of 1.11 euros to the pound. Now the same €60k used to cost £46k when the exchange rate was 1.30 a difference of £12k. Which might be enough to make you think twice but using a high level of finance can reduce the impact of the current exchange rate.

Let's look at the figures on the back of an envelope:

Purchase price €200k

Purchase costs €15k (£13.5K@1.11 or £11.5k@1.30)

Rental income €8k

Cost of €200k mortgage @ 4% over 25 years €12.5k

Balance to pay for the year mortgage cost less rental income €4.5k (£4k@1.11 or £3.5k@1.30)

So the difference over the year between the exchange rate now and a usual level is just £500, which does not seem like something to stand in the way of taking advantage of the bargains on offer. Of course the strategy would be to use the deposit later to pay off a chunk of the capital on the mortgage and to reduce the monthly payments when the exchange rate improves and the pound gets stronger again.

So with all of the above it just seems like there are few reasons to delay you purchase in France, which you do seem interested in having finished this post. So why not give us a call on +44207 471 4515 and we can get started.

Athena Mortgages ©

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French mortgage comparison tables: Things to look out for.

Using a French mortgage comparison table is a good method for comparing the differences between mortgages in France. A few sites offer such tables but generally these French mortgage comparison tables do not go into much depth, encouraging a click to fill in an application form or prompting a call to the French mortgage broker to clarify the situation. This trend is quite sensible in fact as due to the complexities of the French mortgages on offer make it quite difficult to display all of the salient points, rendering the comparison simply of the latest rates for French mortgages relatively meaningless.

For many years French banks have used an introductory rate, generally fixed for 3 months to make an attractive headline number which many buyers in France have been drawn to when browsing French mortgage comparison tables believing that mortgages in France are similar to those in the UK. We believe that these introductory rates are a sham and should be ignored as the key rate when taking any mortgage in France which has a variable element, is the margin which the bank applies to the European Interbank Offered Rate (Euribor).

The majority of tracker mortgages in the UK track the Bank of England Base rate which moves in the main once per month. French mortgage trackers, on the other hand, track the European Interbank Offered Rate which fluctuates on a daily/hourly basis, meaning rates can fluctuate less obviously. The Euribor is the rate at which euro interbank term deposits within the euro zone are offered by one prime bank to another prime bank. Now on average these fluctuations are not huge and the disparity between the European central bank base rate and the 3 month Euribor is not more than 0.3% and currency the 3 month Euribor is in fact below the ECB base rate of 1% at time of writing.

So search for good French mortgage comparison tables and make sure you find out the margin and which Euribor index your tracker rate will be based on. Just follow this link to our French mortgage comparison table which gives you an idea of how we think the information should be presented so that you can compare the different French mortgage options properly.

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French equity release mortgages in France gaining in popularity

French equity release mortgages are increasingly popular with our clients at Athena Mortgages with many new enquiries coming in daily. The main reason for the interest is of course the exchange rate which has the euro very strong against the pound and a large basket of currencies.

Those who bought in the last few years borrowing against equity in their property in the UK or elsewhere to profit from the strength of the pound to purchase a dream or bargain property in France are now reaping the benefiting by releasing that equity in France, converting the funds to Stirling with a profit approaching 25%. Some of our recent clients are using the windfall to pay off a portion of their UK mortgages, fund new ventures or additional properties.

Getting an equity release mortgage in France is simple. You can remortgage your existing property up to a value of 85% using standard french mortgage products, subject to an affordability check, providing the supporting documentation and valuation. French equity release mortgage rates start from 2.9% on a variable rate basis and with current fixed rates for equity release mortgages in France starting at approximately 4% of a 5 year fix.

We are always ready to help you find out what the options are to find your plans and circumstances, so for a free and personalised review just follow this link to find out more about what paperwork is involved in getting French equity release mortgages in France or call +44 207 471 4515 to speak to Erwan, Laure, Arthur, Ryan, Mathilde or John.

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