LE GRAND MAINE  - Holiday home to  rent in southwest France
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Mortgage rates hit historic low - a great time to buy in France!

MORTGAGE rates have fallen to their "lowest since the Liberation" with the average of 3.23% being just below the 3.25% registered in 2010. 

Revealed in a study by loan guarantee group Observatoire Crédit Logement/CSA, it says that the low rates could allow finance houses to put the brakes on the fall in market activity - which has seen the number of loan agreements plunge 33% in 2012. 

Banks have not made their approval requirements any tighter and Crédit Logement said that last month 95.5% of the loans approved, before insurance and guarantees, were at rates of less than 4%. That figure was just 50% in the first quarter of 2012. 

Instead, the slump in mortgage demand has been caused by the general economic gloom and the fear of unemployment. It has hit estate agents hard. 

Simon Smallwood of International Private Finance said: "People who want to move to France will rarely have a better opportunity to lock in extremely low interest rates – especially with recent falls in prices. 

"Interest in French property has remained strong over the past two years however the fall in the number of purchases has been due to potential buyers being cautious about committing to new purchases. 

"Improving economic sentiment in an increasing number of countries and other factors such as historically low French mortgage rates provide positive signs for the year ahead.” 

Mortgage specialist French Private Finance said it was a "historically good time to buy in the country with loan to values of 80% of the purchase price and effective interest rates from 2.4% over 25 years". 

Director John Busby said: "In December, borrowing €200,000 over 20 years cost on average €80 less per month than in January. This means overall savings of nearly €20,000 over the loan duration." 

Crédit Logement said that part of the increase in demand at the end of the year was caused by a move to cash in on the final chance to invest in rental property under the Loi Scellier - which is being replaced by the new, more restrictive Loi Duflot. 

Others also moved to benefit from the old-style prêt à taux zéro (PTZ) to buy a first property, as it was retargeted on January towards those with more modest incomes.