The French Mortgage Market for Non-Residents – January 2010 Update

Following the turbulent times the French mortgage market went through in 2009 let’s take a look at how this has left things for the start of 2010.

The majority of banks will lend up to 80% of valuation, although a few still have a maximum of 70% of valuation.

We have a panel of selected first rate French banks with whom we can negotiate up to 85% of valuation where this is essential for our clients and where the client has good financial status.

Variable rate French mortgages are exceptionally cheap, in the range 2.5% to 3% “all-in”. Variable rate loans can often be repaid early without penalty, so if you envisage settling your mortgage well before the full term a variable rate mortgage may be the ideal choice.

Fixed rate French mortgages are available at rates in the range 4.20% and 5.20%, depending on the term of the loan, for periods up to 30 years. Fixed rate French mortgages almost always carry an early repayment penalty so are the ideal choice for those not intending to repay the loan early and who, like us, expect to see much higher interest rates from about 5-10 years out.

The French non-resident mortgage market is generally less sophisticated than the UK, US and Australian domestic markets, therefore there is less emphasis on structured mortgage products. Nevertheless, some banks will offer “capped” mortgages, although they may only offer loans up to 70% of valuation.

Despite the credit crunch French mortgage lending overall is no tighter than in previous years, but there is a tendency among banks credit committees to stick closely to established policies and allow much less discretionary lending. This means that lending ratios, policies and recommended pricing being more strictly followed so the best French mortgage deals will come from the French mortgage brokers, such as Best French Mortgage, with longstanding lender relationships and a track record of success.

Click here to apply for your French Mortgage.

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