Lowest rates in 65 years tempt Brits to buy holiday homes across the Channel, but experts warn France is the most overvalued European market.
French Private Finance (FPF) say that today is the best time for Brits with money in their pocket to buy French property since the end of World War Two with leading savings bank Caissed Epargne offering a 3.35% deal on a 20 year fixed rate mortgage.
These rates are 0.25% lower than those available back in the late 1940s and can be taken advantage of by anyone with a 20% deposit in their pocket.
An FPF spokesman said, “These are the best rates investors have seen for more than 65 years so it’s no surprise we’re seeing investors choosing to lock in some long-term value in French bricks and mortar”.
Falling Interest Rates
John Bushby, one of FPF’s directors, specified that most of these rate falls have come in recent weeks.
“There’s certainly been increased interest from buyers that has coincided with the rate falls. News has filtered through. But it’s also because things are looking better at home”.
Low Eurozone rates have remained unchanged at 0.75% since a cut last summer and FPF say that borrowing rates have been driven down by competition between banks to attract the best applicants.
Furthermore, the best tracker rate in 20 years has also declined and is now sitting as low as 2%.
Caution Is Still Advisable
However Telegraph Money advised caution and to look towards the bigger picture as a whole.
It argues that while these competitive rates undoubtedly perk interest among Brits looking to invest,
the French property market is actually the most overvalued in Europe and the cheap loan is not matched by an internationally competitive property price.
This is based on value in the market, worked out by plotting a comparison between house prices with salaries and the earning potential of homes against historical norms.
According to this, the Economist’s house price index concludes that homes in France are 50% overpriced compared with rent and 35% compared with wages.
(‘Overpriced’ is still very much a relative term though as typically European house prices are still typically cheaper than the United Kingdom.)
So although they are still much cheaper than back home, in real terms they are actually more expensive to buy;
so buyers need to take this into consideration, but the combination of large areas of beautiful countryside with few residences and current interest rates means that many buyers will still be tempted to buy holiday homes in France today.
The FPF spokesman added, “With such low rates it is now much easier for investors to find self-financing properties, especially in central Paris and the Alps.
Seasoned investors understand that these rates won’t be around for long so they’re trying to capitalise now”. The cost for a €100,000 loan is now €572 or £482 a month for the fixed-rate deal.
Have you recently got a good deal on French Property? If so we would love to hear from you. Please let us know about your experiences in the comments below.
James made the move to France over five years ago, regularly blogs about his experiences and has never looked back.
