The current period is, in spite of the upcoming elections, a great period to get a mortgage for the following reasons:
- Banks have money to lend at low rates
- Banks’ activity has significantly decreased, they have fewer files to study which shortens the time by which they give their decision and they are more open to negotiation on good profiles.
- Finally, as “the Salon de l’immobilier” is being held, banks are making discounts: some have « offered » a 3.65% fixed rate over 20 years!
The reason the banks have money and are able to lend at lower rates is due mainly to the ECB LTRO (Long term refinancing operation) programme which lent millions of Euros to each bank providing a massive increase in in liquidity to the mortgage market, allowing the banks some breathing space. This has also put downward pressure on the Euribor which has been dropping steadily and now stands at approximately 0.75% meaning thousands of borrowers are now paying less for their mortgages.
If you would be interested in finding out how much you can borrow in France or to discuss the current best buys, simply contact us to find out more about French mortgages.
If you would be interested in finding out how much you can borrow in France or to discuss the current best buys, simply contact us to find out more about French mortgages.
ECB, currency policy
The ECB has, as predicted, maintained its main rate at 1%, in spite of the risks on the activity. Mario Draghi, conscious the inflation rate is above the maximum level fixed by the ECB itself (2%), believes that they have to maintain the support to the banks as long as global “exit of crisis” strategy has not been found.
EURIBOR, short-term rate
The Euro Interbank Offered Rate is the rate at which French banks and institutions lend money to each other. The drop in the rate that has begun with the first LTRO is not about to stop as it seems that the ECB is not unlikely to act again. On the 11th April 2012 EUR 3M=0.760% and EUR 1Y =1.393%.
TEC, Long-term rate
The level of the TEC 10y shows the level of the long term fixed rate that is being applied by banks for mortgages, on top of which they add a margin. This mid to long term loan has led to a small increase in rates, but demand still is supplied. This increase is also partly due to the presidential elections, causing some kind of uncertainty. OAT 10y on 11th April 2012= 2.98%.
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