Best Mortgage Deals
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Best Mortgage Deals - Investing In Property In Europe

best mortgage deals by AnnaHaving looked at the US and UK property markets, let's now look at those in Europe, and if you are already a property owner here, ( as I am ) there is both good and bad news, so getting the best mortgage deals won't protect you here either I'm afraid. As you will see I haven't covered every country in detail, but just the more popular ones for overseas buyers as second homes or holiday homes, so let's start by looking at the role of the ECB, the European Central Bank which controls interest rates in the "Eurozone".

Best Mortgage Deals - The ECB

With interest rates at 4%, you may feel that the Europeans have little to complain about, but these rates are starting to hurt. The two worst affected markets at the moment are France and Spain, and this situation is not helped by the strong Euro which has continued to climb in value against most major currencies including the UK pound and the US dollar. If you are already invested in the Euro, then this is good news as your investment is increasing in value. The bad news however is that it is increasingly difficult to find a buyer. Many overseas investors have forsaken the traditional countries such as Spain, France and Italy, in favour of more risky investments in Eastern Europe. Most of the purchases have been in cash as many of these countries lack the financial services industries to support mortgages, so finding the best mortgage deals overseas can be almost impossible.  Time will tell what happens here, but with the collapse of one company selling overpriced East European property to unwitting investors already, I believe the writing is on the wall! The ECB are unlikely to reduce rates in the near future so the pain is likely to continue for a while longer. As a currency trader I frequently write about the Euro exchange rate so please have a look at the blog before investing.

Best Mortgage Deals - Investing in France

French house prices have shot up by 210pc since 1995, compared with 190pc in the US, much to the delight of 180,000 Britons who already have second homes in the country. Coupled with the strong Euro, they have done very well, but after years of double-digit gains the pace slowed to 7.2pc last year and turned negative in January 2008 with a fall of 0.6pc which will no doubt continue for some time to come, particularly if the Euro remains as strong as at present, which seems likely. Whilst France will undoubtedly suffer, almost all mortgages are on fixed rates, and tough lending rules have prevented the emergence of a US-style sub-prime market. French banks usually restrict lending to 75pc of the home’s value thus keeping a check on repossessions and defaults. However what is more worrying is that according to France’s OFCE research institute, house prises are 25pc overvalued, so a fall in line with the UK seems likely.

Best Mortgage Deals - Investing in Spain

Spanish house prices have jumped 270pc in a decade, even though more houses are being built there than in France, Germany, and Italy combined. The central bank has warned repeatedly that the market is overheating, but it is virtually powerless to stop it after Spain joined the Euro and gave up control over monetary policy. Buyers in Spain are virtually non-existent, and prices are now falling fast with the Costa del Sol region particularly hit. Manuel Romera, director of Madrid's Instituto de la Empresa, said recently "I can see a mortgage crisis building. We have a serious property bubble in this country and everyone is in denial; it’s worse than the US”. More than 93pc of mortgages in Spain are on floating rates, making the country vulnerable to Europe’s monetary squeeze as owners struggle to cover their mortgages with falling rental demand and a vast over supply of properties.

Best Mortgage Deals - Investing in Italy

For Italy’s housing market 2007 was another year of slower house price growth. The slowing of house price rises is largely attributable to higher mortgage rates. Italian households are sensitive to minor changes in interest rates, since 87% of mortgage loans are floating or fixed for only one year; less than 10% are fixed for ten years or more. House prices have generally increased since 1997, after a long period of recession in the mid 1990s. House prices have appreciated by 73% (48.5% in real terms) from 1998 to 2007, and the most popular areas for overseas investors are in Liguria, Tuscany, the Northern Lakes, Puglia and Umbria. Although there are no restrictions on foreign ownership of properties in Italy, high transaction costs and taxes and laws that restrict rent increases and provide tenant security, are detrimental to the rental market.

The Italian property market, unlike some of its European counterparts, is expected to remain stable during the next two years. Though the steep increases in prices as in recent years are unlikely to continue, a decline is equally unlikely, according to the Bologna-based think-tank Nomisma, which believes that the housing market will be stable, with a modest increase. Their prediction in Italy for 2008 is a small house price increase of 3.8%.

OK - having looked at property market cycles and where I believe markets are heading in the US, UK and Europe, let's start looking at how to identify the best mortgage deals available in the market, and in particular to understand the benefits or otherwise of each.

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