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Dordogne Valley (S Corrèze, & N Lot)
Head Office, 19120, Puy d’Arnac
T +33 (0)5 55 28 46 40
M +33 (0)6 62 28 02 25
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Poitou Charentes & Vendée (Departments 16, 17, 79, 85 & 86).
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Return of inflation in France: going into debt saves

In the midst of a purchasing power crisis, the real estate purchasing power in France’s ten largest cities has been on the rise for the past 10 years.  In fact, in taking out a loan to acquire their housing, French buyers ultimately increase their wealth due to negative real rates. Currently, borrowing rates posted and used by banks remain stable at an all time low level of 1.55% over 20 years. The return of inflation (2%), however, is changing the game yet again, allowing households to earn money by going into debt.

For example, a household that now owes €200,000 at 1.55% over 20 years will have a monthly mortgage payment of €968. Assuming that inflation remains stable at 2.2% over the term of the loan, the monthly payment of €968 would only be worth €625 in real currency in 20 years, a decrease of 35%. All in all, the happy owners would have finally repaid only the equivalent of €188,000 at the end of their 20 year term, compared to €233,000 without inflation.

The real borrowing rates are therefore negative, at -0.7% ! 

We are able to offer exceptional mortgage deals via our dedicated mortgage broker in France