The market for French property may be set to suffer from a reduction in the amount of overseas buyers owing to a combination of economic factors. The European economy has exited recession strongly which has pushed up the price of a euro to record highs against several currencies over the past few months.
This has made it less affordable for overseas buyers of French property on two counts. Firstly the value of any deposit available to put towards the French property is less and secondly the higher value euro has decreased the amount non-residents can borrower based on the French banks income to debt ratio affordability criteria.
Which brings us to the second reason for the market tightening up, the French banks’ attitude to lending.
Many banks have decided to reduce their exposure to the real estate market and so have been tightening up their underwriting criteria when choosing which clients it wishes to lend to. Some of these changes are in anticipation of the new capital adequacy requirements and responsible lending practices of the Basle III agreement between international banks which will come into effect at the end of 2011.
The main people to suffer from the increased criteria will be those on lower incomes who will be required to show they have enough money after, their mortgage payments, to pay for living expenses according to a chart which includes the number of children in the household (fair enough). Investors who which to borrow on an interest only basis will also find the available loan durations shorter and requiring an increase in the level of net assets in cash and investment property to secure the loan. Those with very large property investment portfolios may also struggle to find a willing lender as each person’s maximum total borrowing may soon become 7 times their gross income which includes your main residence and all investment property.
Athenamortgages.com is the largest French mortgage brokerage in the UK, with offices in Dublin and Paris. Working with a network of more than 50 resident and non-resident lenders in France, Athenamortgages.com provides access to a wide range of bespoke loans and mortgages for properties in France.
This has made it less affordable for overseas buyers of French property on two counts. Firstly the value of any deposit available to put towards the French property is less and secondly the higher value euro has decreased the amount non-residents can borrower based on the French banks income to debt ratio affordability criteria.
Which brings us to the second reason for the market tightening up, the French banks’ attitude to lending.
Many banks have decided to reduce their exposure to the real estate market and so have been tightening up their underwriting criteria when choosing which clients it wishes to lend to. Some of these changes are in anticipation of the new capital adequacy requirements and responsible lending practices of the Basle III agreement between international banks which will come into effect at the end of 2011.
The main people to suffer from the increased criteria will be those on lower incomes who will be required to show they have enough money after, their mortgage payments, to pay for living expenses according to a chart which includes the number of children in the household (fair enough). Investors who which to borrow on an interest only basis will also find the available loan durations shorter and requiring an increase in the level of net assets in cash and investment property to secure the loan. Those with very large property investment portfolios may also struggle to find a willing lender as each person’s maximum total borrowing may soon become 7 times their gross income which includes your main residence and all investment property.
Athenamortgages.com is the largest French mortgage brokerage in the UK, with offices in Dublin and Paris. Working with a network of more than 50 resident and non-resident lenders in France, Athenamortgages.com provides access to a wide range of bespoke loans and mortgages for properties in France.
.jpg)
Posts
