The scene is set: a progressive rise in loan rates
February 2011 saw a confirmed yet measured rise in interest rates which started at the end of last year: the average rate over 20 years is now established at 4.05%, compared to the 3.94% of January 2011. Since November of last year when rates were at their lowest ever, we’ve seen a 0.40 increase.
Banks have in general gone ahead with several adjustments. Those that hadn’t raised their rates these past two months have done so now, sometimes by a lot, whilst those that had already published interest rate rises in December and January have lowered them slightly now. These adjustments by the banks show their will to not block the market, mortgage loans remaining an important way of attracting new clients.
Thus in February, roughly 39% of banks have raised their rates by an average of 0.17, although some have gone up by 0.70. Then again, 37% of banks have lowered their rates by 0.11. The 24% left have remained stable.
This progressive climb in rates is inevitable over the next few months
|Rate Type||Interest Rate||Maximum Rate||Monthly repayment for €100,000 over 15 years|
|Variable Interest Only||2.40%||80%||€200|
|Fixed Interest Only||4.05%||100%||€338|
Even though interest rates are rising, there is still time renegotiate, especially for mortgages that have been taken out in 2008, a year in which the rates were as high as 5.15% over 20 years. For example, a borrower who has taken out a loan in August 2008 over 20 years at 5.05% could save himself 23 000 € with a new rate at 3.80% over 18 years, and up to 42 000 € with a rate of 3.55% over 15 years, which equates to a 32% drop in the price of the loan.
For more details regarding French mortgages, you can have a look at our website dedicated to French mortgages: http://www.sextantmortgages.com
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