Predicted rates rise means crunch time for French homebuyers

Published 06th May 2011

Those considering buying a property in France are urged to get in early to avoid an upswing in mortgage rates, with some banks already beginning to pass on the European Central Bank's universal hike in rates last month.

The ECB's increase of 0.25% was its first rate hike in two years, indicating the economic recovery of the EU and acting as a brake to growing inflation. With French rates remaining at a historic WWII-era low, much speculation exists amongst mortgage brokers that the increase will be passed on in the French market. Broking firm Sextant French Mortgages has already reported 79% of their partner banks having raised their fixed rates last month, but there is still a chance for buyers to secure the last of the low rates before increases really take off.

"We have seen an average increase of about 0.2 percent in the cost of variable rate mortgages, with some banks opting to further increase their margins", said John Busby, director of Athena Mortgages. "We should expect further increases to the lowest rates on offer as it becomes more expensive for banks to refinance and maintain market beating rates."

Source: ' TMC '

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