Rates are increasing...

[makeiteasy]

I want to inform people who are looking to purchase in France that further the slight increase of the european central bank from 2% to 2,25%, it might be a good idea to not wait too long if you intend to borrow some money because rate are begining to increaseand be careful with variable rate if they are not capped

[maxsan]

Well yes although for those of us who already pay a French mortgage it is too late. Still, the good thing here in France is that when the rate goes up, the payment stays the same just the term lengthens or shortens.

[peterw]

I think it is dangerous to assume that the ECB will be on continual upward revision to rates(which your comments imply) The ECb have been very clear that they are there to target inflation only. This is in direct contrast to greenspan in the US who has shown by his actions that he wants to act to stop the housing bubble.

In any case there is a world of difference between the US with its lax lending standards and that of the eurozone particularly France. Hence the Eurozone housing increases are more sustainable than in the US. I very much doubt that the ECB then will be targeting the relatively mild housing boom of the eurozone. Germany housing has in fact declined in real terms; France whilst it has moved substantialy, was due for a sustained move in housing prices due to the depression in housing prices in the early to mid 90's . The netherlands are an exception where there clearly is a bubble- but it is hardly the engine room of the Eurozone and thus will not be driving rates.

The ECB will be looking nervously at the oil price from this point trying to see whether the rise in oil price will flow through into higher cost of goods and services. My prediction is that the Oil price will not move much above where it is now thus its impact on inflation going forward will be minimal.

The economic growth rate of france and germany has been pretty anemic really considering the low interest rates, and IMO reflect the huge problems that these economies face without restructuring. Of course there must be the political will to do this restructuring something that Chirac has shown to be completely lacking in leadership.

So whilst normal economic cycles of the past would predict further interest rate increases I think this time it is different. Dont panic into making decisions based on the past. Remember by fixing there is a certain "insurance" premium built into the rate by the banks which is only worht paying for if you feel that rates will continue higher.

[le bouffon]

You missed out 25%+ house price inflation here in France which puts the houses out of reach of a lot of the french who mainly rent rather than buy,it will no doubt affect brits with a euro mortgage but who cares I paid cash for my house by the med and that option is open to anyone.