The New Measurement of Zero Interest Loan
The housing component of the plan to revive the economy announced by the President of the Republic in Douai December 4 last provides a doubling of the loan amount to zero for 2009.
The two decrees on the new device are published in the Official Gazette December 20, 2008 and for the purchase of a new home in a principal residence as of January 15, 2009.
The doubling of interest-free loan was effected through a dual mechanism:
• Raising the limit of the amount available to 30% of housing prices (instead of 20% previously). This amount up to 40% in urban zones.
• Increase the ceiling depending on the area of purchase.
The repayment period is also lengthened significantly.
An example was given by the government. It concerns a childless couple who bought a house in Reims 135 000. The new loan rate to zero would represent the household assistance of 40 800 euros over 19 years. The monthly payments on them would be reduced to 728 euros instead of 848 euros without the device.
The measure will last until December 31, 2009, but the effects of the financial crisis could well lead the government to extend beyond that date.
Two out of three households are concerned and we consider that the measure would encourage the purchase of 100 000 new dwellings. This constitutes a real boost for property developers in a very difficult and could cost around 600 million euros to the state.
However, it will check if it is sufficient to allow low-income households to purchase goods whose price has been doubled over the past ten years and remain generally too expensive.
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