French mortgage rates have just dropped below 2.0%, for the first time in a century. The value you can now lock in on a long-term fixed rate repayment mortgage is completely unprecedented for modern times.
Rates for a 20- year repayments mortgage with a loan to value (LTV ) of 80% have dropped to 1.85%, for the duration of the loan term. This is available to the majority of non-residents buying across France, with some localised rates even lower. This means that, with a modest rental yield of 3-4%, international buyers can more than cover their interest payments, whilst also paying down some of their capital too.
For British buyers, this significant drop in interest rates, offsets the change in exchange rate, with today's GBP/EUR rate only circa 5% below that of two years ago. This means that the interest payable over a 20 year period, have fallen 42% in the same period.
Taking a typical loan of €400,000 current buyers are saving just over €39,000 in interest payments over the course of a 20 year fixed rate mortgage, on an loan to value of 80%, which is roughly €10,000 for every €100,000 borrowed. People who were previously buying cash, are now using finance to manage the loss in currency values, hedging against future exchange rate movement.
On the whole these rates are driving demand for property in the French Alps, particularly for those purchasing in sterling and the news for those buyers using USD, is even more positive, with the perfect combination of extremely low interest rates and a very favourable exchange rate.
For further details and to speak to a mortgage broker, please contact us.