With doubts regarding the economic growth, the European Central Bank (ECB) should not modify its key interest rate, at the record low level of 1%, before the next year. By consequence, Interest rates in September remain unchanged compared to July 2010. They are still lower compared to January 2010 with the Euribor 3 months rate at 0.888% so it is the still a good time to take on a fixed rate, at their lowest value ever.
French interest rates and how they work
Most of the French Mortgage lenders index their rates to the Euro Interbank Offered Rate, or Euribor, the average interest rate at which term deposits are offered between prime banks in the EU wholesale money market or interbank market. Just like the LIBOR serves as a short-term reference rate for British Pound and U.S. Dollar, the Euribor is widely used as a reference rate for Euro.
The French banks usually index their rates to Euribor 3 months currently at 0.888%. Each bank applies a margin of between 1.30% to 2.50% depending on the lender and the product’s features.
Variable products are usually redemption penalty free, although some banks may charge penalties in case of a re-mortgage. Fixed products are currently very low and very popular, but capped products starting at 3.50% and capped at 4.50% are also recommended in the current climate.
Best French Mortgage products currently on the market
1. Interest only mortgages with variable rates starting from 3.15%
2. Rates starting from 2.20% for equity release and re-mortgage
3. Rates fixed for the entire term starting from 3.15%*
4. Some French products are capped at 1% above the initial rate, to give you more security
5. 100% LTV French mortgages with capped rates starting from 3.50%** .
|Rate type||Interest rate***||Maximum LTV||Monthly repayment for €100,000 over 15 years|
|Variable Interest Only||3.15%||80%||€262|
|Fixed Interest Only||2.95%||65%||€246|
|Capped Repayment||3.50% capped at 4.50%||100%||€715|
* Over a short term of 6 years on a repayment basis, for a loan of or above €230,000
** You would only be expected to pay the Notaire fees and the estate agent’s fees. Available only for properties of over €300,000
*** Higher rates may be applicable for longer terms and different loan amounts
For more details regarding French mortgages, you can have a look at our website dedicated to French mortgages: http://www.sextantmortgages.com
If you would like to receive a free quote with no obligation, contact our in-house mortgage consultants by telephone: 0207 428 4918 or by email: [email protected]