Why is having a credit rate below 0% not possible in France?

Why is having a credit rate below 0% not possible in France?

Back on why home loans and interest rates below zero percent are not compatible in France. A few weeks ago, the news pointed out that the Danish population has mortgage interest rates below 0%. Needless to say, this is a real opportunity for these borrowers who earn money by going into debt to become homeowners. However, the Danish banks are not losing out since they should recover the sum granted by combining the repayment of the capital and the amount of the administrative fees paid by the borrowers.

 

Denmark starts mortgage loans at negative rates

mortgage loans at negative rates

But can this amazing situation spread to France? For the French, one should not expect to jump for joy since the law does not authorize banking establishments to formulate offers of mortgage at negative rates. It is the Civil Code which prohibits this practice and which specifies that a bank cannot lend at a loss and that it must receive the full return of the capital released during financing. Unless there is a legal change, it is difficult to foresee a credit below 0% in the future in the French territory, regardless of the level of income.

 

Even lower rates in the coming months?

mortgage loan

However, it remains entirely possible that people can borrow at even lower rates than at present. If the economy goes in this direction, perhaps the cost of credit will beat new limits, while the thresholds recorded in previous periods demonstrate exceptional loan conditions. Indeed, the month of July was one of all records with an average loan rate of 1.20% over all durations. And the rate is even more favorable when looking at the offers receiving repayment over 15 years with an average of 0.96%.

The month of July is only the continuation of a year 2019 under the sign of cheap credit where the banks pour their funds at full speed into the real estate projects of households. And according to comments by some experts, interest rates may fall further in the months to come. This continuity is moreover noticeable in the latest statements from the Best Bank, the authority largely responsible for the fall in interest rates on home loans.

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