French mortgages: lower rates, longer terms

The end of spring 2019 brought us another breakdown in the French real estate market. This time, interest rates on a mortgage in France have trespassed their historical minimum. However, what is even more striking is that the rates will keep spiraling down at least in the current and next quarter of 2019. The main reason for such conditions is that European Central Bank announced new long-term loans for banks in September. Known as TLTRO loan, it is designed to keep credit policy smooth in Eurozone companies.

One of the major reasons for such low prices is that banks are looking for new customers. Low fares will attract new clients but insurance expenses and other fees will eventually make the deal beneficial for both sides. Loaners presented another treat for clients with longer credit terms. Since 2018, an average loan duration rose from 216 to 227 months. A quick recap from past years shows that borrowers started to lean towards longer loan times: 25-30 years’ loans skyrocketed from 23% in 2010 to 41.5% in 2019.

The bigger picture of interest rates for mortgages features unusually sweet and attractive conditions for those who decided to acquire real estate in France. Low rates for longer periods will provide the buyers with significantly cheaper monthly payments. In addition, statistics showed that banks’ demand for personal contribution lowered by 10% since last year. Simply put, the possibility of borrowing without much money in your account is higher in 2019. As a bonus, the current state of affairs is a perfect time to renegotiate an already existing mortgage with your bank.

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