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France and the other G20 countries are experiencing a fragile recovery according to the Governor of the Banque de France, Christian Noyer. He stressed that the support efforts being made by governments must be continued.

Yesterday the Bank of France raised its growth forecast for the third quarter to 0.3%, whereas a month ago it anticipated a stable GDP.

The International Monetary Fund has also recently revised its growth forecast upwards for 2009 and 2010 noting that the recession ended more quickly than expected.

"Since the spring there have been positive signs and we continue to see a proliferation of better signs," confirmed Christian Noyer on Europe 1, citing the return of consumer confidence, the recovery of industrial production and the strength of consumption or restart global trade.

"Recovery was definitely faster than the forecasted, things are divided but we must remain very cautious," he said.

"For now it's the end of the recession, but by the end of the crisis and we're still waiting to see the turnaround in the job market and it may take a number of months."

These "elements of fragility" require continued efforts and support, "said Christian Noyer, who sits on the Board of Governors of the European Central Bank.

"France and all the other G20 countries must continue to support our economies as agreed. The central banks are determined to continue their policy to support economic activity for the duration, "he said.

THE cost of credit is lower than ever and there has been a return to attractive variable rates. All the conditions are perfect now if you need a mortgage to finance your house in the Dordogne. 

Fixed rate loans go lower and lower.

Interest rates fell even lower last month. For loans over 20 years, the most common loan term, rates fell to 4.25% in late August. A 15 year mortgage, now has a rate of 4.10% or almost 1.25% down from the high reached in October 2008.

For many banks, the mortgage is back as a loss leader in attracting new customers. The good news is that the cost of credit is expected to fall further in September.

Brokers expect fixed rates to settle at 4% over 15 years and to 4.15% over 20 years. 

But there is speculation among analysts that the downward trend may not last.

The return of variable rate mortgages.

Before signing your loan, compare rates fixed to variable rates advises Empruntis who maintain that, on average, variable rate mortages are 1% lower than fixed rate products. 

To minimize risk, opt for a "capped" loan. In other words, a type of loan that doesn't soar when there is the slightest rise in interest rates by the European Central Bank.

So, for example, a rate capped at 1 will not increase by more than 1% while a rate capped at 2 will not exceed a 2% increase. 

For a loan capped at 1% over 20 years, average rates are currently 3.10%. And if it is capped at 2%, expects an average rate of 3%.

But be careful. Institutions that offer more competetive fixed rates don't necessarily sell loans at variable rates of interest. 

AFTER several months of decline, French house prices remained stable in July (up 0.4%), according to the latest monthly index of Fnaim, the Federation of Estate Agents in France.

This development, however, doesn't imply that the French property market  is no longer fragile.

Indeed, the average values of sales for transactions signed in July 2009 dropped by 6.4% over the same period in 2008.

Poor economic conditions could also continue to
weigh on the housing market over the next month.

The Federation continues to hold it's position on its original forecast for the whole of 2009, that house prices will drop by between 5 and 10%.

source: FNAIM

ACCORDING to an online article in the UK on the French property market, house prices in France are heading north. Certainly, activity here in the Dordogne is brisk and among the hordes of holidaymakers there is a rising number of serious property buyers.

There is no doubt that demand from international buyers is on the increase as the property market stabilises. But is it just another dead cat bounce?

FNAIM, the French federation of estage agents say that average prices across the country rose by 3.9% compared to the same time last year.

One source said that "it is difficult to say whether this is the begining of a recovery but it points to improved market stability".

So, have we reached the point, at least for the time being, where those who haven't yet bought have missed the boat ?

The Euro continues to weaken against the British pound. Good news for buyers as long as house prices for property in the Dordogne are held low.

At the time of writing the interbank rate was 1.17185

WE WOULDN'T dare attempt to answer this question without the help of a qualified subject matter expert.

So, we asked French lawyer and wealth consultant, Guillaume Barlet, of Bank House Investment Management Ltd to give a CGT masterclass.

The topic of Capital Gains Tax on second homes in the Dordogne is one that is much talked about but very few people can shed enough light on.

In this article on our blog, Guillaume explains CGT by giving a clear example of how it all works.

See the bottom of the article for Guillaume's contact details should you need more information.

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