Mortgages in France see competiton and innovation

Mortgages in France have not historically been a hot bed of innovation and competition but signs are that the French mortgage market is beginning to catch up with its cousins abroad. Recent reports from French specialists Empruntis reveal that September showed a reduction in the average rates of 0.20% for fixed rates for most durations and a reduction of 0.15% in the rates for variable mortgages indicating strong competition from French banks and French home loan specialists.

For mortgages in France for non-residents, we are seeing innovation with a next generation Hybrid mortgage product with rates typically under 3%. This Hybrid mortgage allows you to split your loan into two parts, one on an interest only basis and one on a capital and interest basis. There is a minimum loan amount of €300,000 and at least €100,000 must be on interest only. A further criteria for the loan is that the borrower must be able to show 150% of the loan amount in net assets made up from net equity, savings, stocks or shares.

The outlook for the French property market as a whole seems positive with the FNAIM, national association of estate agents reporting that the market is stable. In September, prices rose 0.1% and though prices are down over the last quarter, the overall picture is good with a rise of 2.8%. This upsurge in prices is in part responsible for the competition and innovation amongst the banks who are seeking to increase their share of the mortgage market in France. Other aspects that make up the picture are the rises on the stock exchanges, the price of gold and the slowing rise in the growth of unemployment. As has been written elsewhere, these conditions point to an excellent period for buying French property; low interest rates and still uncertainty in the property market mean there are bargains available. Access to finance is good for those that can afford it at up to 100% loan to value meaning there is not even any need to worry about the strength of the Euro. This period looks set to last for a while as Jean Claude Trichet has deemed the current rates of interest appropriate signalling that the current rates should last into 2010. While this period won't last for ever, it seems to be with us for the next 6 months at least before we may see the return of inflation and higher interest rates.

Remember that all mortgages in France require supporting documentation and are subject to an affordability calculation based on tax returns or audited accounts. For a guide to getting mortgages in France there is a handy article I wrote yesterday here. Guide to mortgages in France.

Posted in: French Banks,French property,Mortgages in France