Mortgage under European Bank Rates - to fix or not

edited 30 November -1 at 1:00AM in Mortgages & Endowments
nsc_2nsc_2 Forumite
9 Posts
edited 30 November -1 at 1:00AM in Mortgages & Endowments
We live in France and we’re in the process of deciding on a mortgage.

In France, you generally ‘fix’ for the whole term of the mortgage (in our case, 15 years), or take a capped variable. As in the UK, different banks offer different things.

At the moment, the fixed rate tends to be at 4.1%, while the variable tends to be around 3.5%. The ‘capping’ differs from bank to bank. The variable with the Société General, for example, can go up or down by 1% - ie. up to 4.5% or down to 2.5%.

With the Caisse d’Epargne, the rates can go up or down by 2.5% - ie. the maximum would be 6%, but with this mortgage, rates are only reviewed on a 5 yearly basis, meaning that the rate is effectively fixed for the first 5 years at 3.5%. However, thereafter, it could become more expensive than the others (and not easy to get out of).

I’m tending towards a fixed loan of 4.1% because rates seem very low at the moment, and I can’t imagine them going much lower. Therefore, purely by guesswork, I reckon that over the next 15 years, the only way they can go is up – but I know absolutely nothing about the projected stability of the European Bank, so my reckoning may be well wide of the mark. :-/

I guess it depends what happens worldwide, especially with the US markets, but when we go into areas like this, I’m completely lost.

Basically, what should we do? ???
This discussion has been closed.
Latest MSE News and Guides

Card providers to reserve up to £100

When you pay at supermarket fuel pumps

MSE News

Cheap contents insurance for tenants

DON'T assume your landlord covers you

MSE Guides

Summer sizzlers round-up

Incl £2ish sun cream & £1.50 disposable BBQs

MSE Deals