Improved rate for savings scheme

A HOME purchase savings scheme will benefit from better rates from next March.

The Plan Epargne Logement (PEL), a savings scheme used to save up for a deposit towards buying a home, will potentially have a better rate from next year, says Finance Minister Christine Lagarde.

At present, the scheme has offered the same rate, 2.5 per cent for the past seven years; however it will now be revised annually, based on average rates in the financial markets. According to Ms Lagarde, this would have given an average of 2.9 per cent in recent years. It will not be possible for it to go below its current rate.

The move is meant to encourage people to take up the scheme, which has been declining in popularity. However it does not address one problem, which is that one of the intended benefits offered by the scheme, the offer of a fixed “low” mortgage rate of 4.2 per cent, is now of little interest because the rate is higher than the typical market rate ones.

There were 16 million PELs in 2003 and this has reduced to 11 million, while sums invested have dropped from €227 billion to €176 billion.

Photo:© khz - Fotolia.com