August French Mortgage Update

Most of theFrench 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 0.899%. 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. 100% LTV French mortgages with capped rates starting from 3.50%*

2. Rates fixed for the entire term starting from 3.15%**

3. Some French products are capped at 1% above the initial rate, to give you more security

4. Interest only mortgages with variable rates starting from 2.85%

5. Rates starting from 2.40% for equity release and re-mortgage

Variable Repayment

Interest rate***: 2.20%

Maximum LTV: 80%

Monthly repayment for 100,000 over 15 years: 658

Variable Interest Only

Interest rate***: 3.00%

Maximum LTV: 80%

Monthly repayment for 100,000 over 15 years: 250

Fixed Interest Only

Interest rate***: 2.95%

Maximum LTV: 65%

Monthly repayment for 100,000 over 15 years: 246

Fixed Repayment

Interest rate***: 3.85%

Maximum LTV: 80%

Monthly repayment for 100,000 over 15 years: 732

Capped Repayment

Interest rate***: 3.50% capped at 4.50%

Maximum LTV: 100%

Monthly repayment for 100,000 over 15 years: 723

* You would only be expected to pay the Notaire fees and the estate agent's fees. Available only for properties of over 300,000

** Over a short term of 6 years on a repayment basis, for a loan of or above 230,000

***Higher rates may be applicable for longer terms and different loan amounts

August French Mortgage Update

By: Matthieu Cany

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