Tahminae Madani, Director of France Home Finance comments on :
Despite the credit crisis which peaked last October and had a marked effect on the global economy - analysts do look for a gradual recovery in the global economy during the second half of 2009.
The Bank of England cut the UK base interest rate by 0.5%, bringing it down to 1.5% - their lowest level in the banks’ 315-year history. The European Central Bank (ECB) is also expected to cut the base rate this week by at least 0.5%. This is welcome news for borrowers. Eurozone inflation continued its decline in December falling to 1.6%, down from 2.1% in November, which is the first time in months that the inflation rate has come below the ECB’s target range of 2%. The fall was largely down to the decline in oil prices, compared with the same period in 2007. This 26-month low figure justifies the further rate cut expected at the ECB’s meeting this week. The ECB has already cut the base rate from 4.25% to 2.5% since October, as the impact of the credit crunch and the fallout in the financial sector hit the euro economy. If oil prices remain at current levels, analysts say that headline inflation is likely to continue to fall sharply, reaching a low of around 0.5% in June.
The lower the ECB rate and therefore the Euribor index, the better for the French investor. While the reduction in French consumer mortgage rates will not be immediately and directly proportional to the reduction seen with ECB base rate, we do expect a reduction to manifest over the next months. The good news is that French mortgage rates have already significantly come down. If you have been considering a French flat purchase, now is the time to take advantage of very favourable lending conditions.
(Sources: La Tribune, Savills, euribor-rates.eu)
