Is it Your Last Chance to Take Advantage of Low Interest Rates?
Record-low mortgage interest rates in France have buoyed the property market in France for a number of years. Some observers believe we are nearing the end of the steady stream of rate declines, and entering a period of stabilization. A rise in interest rates may even be on the cards for 2017.
The French government’s cost of borrowing has been creeping up in the last months. The OAT 10-year average rate (Obligations Assimilables du Trésor, France’s bond) doubled from August (0.15%) to October (0.33%). The interest rates for fixed-rate mortgages (80% of them in France) tend to follow the OAT 10-year average: when it rises, mortgage rates follow.
Mortgage interest rates could hardly get any lower – and borrowers, of course, are taking full advantage of the current low-rate climate. A 20-year, €200,000 loan today costs €20,000 less than it did a year ago. Average rates, according to pap.fr, are 1.4% for a 15-year loan period, 1.6% for 20 years and 1.85% for a 25-year loan. No wonder that 30% more people requested property loans in Q3 of 2016 than the same period of 2015.
Some observers wonder, with interest rates so low, whether they must enter a period of stabilization or start to go up – since they cannot go down any further. Some publications argue that we are already nearing a period of flat-lining.
With 2016 almost behind us, rates are likely to stay the same through the end of the year. Not so, perhaps, for 2017. For buyers with a real estate project coming up soon, it might be a good time to move forward and lock in the advantage of the record-low rates.
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