April 2018 – French mortgage transaction of the month

What’s going on here?

Interest-only French mortgages are still a popular product for customers wishing to purchase properties in high-demand areas such as the French Alps and the French Riviera. This was the case for a customer who decided to purchase a house in a new development in Nice, southern France.

The €2.2 million house boasts stunning views of the bay with great links to the city centre and the airport. The customer opted for a 50-50 split on an interest-only mortgage. One part being at a variable rate of 2.4% and the second on a 2.75% fixed rate; both over a 14-year period.

The product

In this month’s French mortgage transaction of the month we can see the advantages of taking an interest-only mortgage are numerous. For example, low monthly instalments which can in turn maximise profits from potential rental income. Because of the low interest rates across the eurozone, it makes sense to use this opportunity of taking a smaller variable rate. It is a fair bet since recent news showed that the European Central Bank (ECB) isn’t in a rush to take its foot off the pedal on Quantitative Easing (QE) for at least another year, as we pointed out earlier this month. This brings confidence to French mortgage seekers that the golden period of low rates is likely to continue for some time.

For added peace of mind, the client decided to secure a favourable rate of 2.75% on the second half of the mortgage for the full duration of the mortgage. This is a smart way of locking up a low interest rate ensuring that they will know the exact amount of the monthly instalments for this part of French mortgage. In France it is possible to fix rates for longer periods of time than in the UK, because the banks across the Channel look for a long-term commitment over a short-term profit from their clients.

The bigger picture

The combination of the two products gives the client a great deal of flexibility with low rates on both variable and fixed terms. If the costs were to rise dramatically over the coming years, the client could opt to pay off the variable part of the mortgage early. In this case they would avoid  paying any early repayment penalty fees and see off the other half of the loan at the fixed rate.

March 2018 – French Mortgage Transaction of the Month

This month we look at an booming sector of the French mortgage industry – re-financing.

Whilst technically this one isn’t a done deal yet (and therefore not truly a transaction), we wanted to highlight it as it demonstrates the incredible savings French property owners are currently making on their total long term interest amount by re-financing their properties while the rates are low.

The client, an owner of a three-bedroom ski apartment in the Portes du Soleil still had €640,000 remaining on his mortgage. The original product was a long term fixed rate repayment mortgage over 20 years, but as it was secured back in 2012 the rate was substantially higher, at 3.2%.

Using our contacts with a local bank and based on his profile we managed to secure him a market-beating rate of 1.7% fixed over 20 years on a repayment, no far off half the rate he was on previously.

Local banks are notoriously hard to find and work with, which means having a specialist broker navigate the process exponentially increases the chances of a better deal for those re-financing or even new entrants in the French property market.

IFI – New French Wealth Tax

French Wealth Tax – What’s happening?  

France has always had a reputation for being a high-tax environment, though the truth is it’s one of the most advantageous places to buy property from a tax perspective. However, there is a tax levied against net property and liquid assets held in France which has been part of building this reputation. Nevertheless, it mainly affects French residents rather than international buyers of French property. Since the high-profile exodus of over 60,000 millionaires during the last 10 years, there has been a significant drop in revenue into the government’s coffers. The Macron administration is hoping to entice the French expat elite back with a new wealth tax based on real estate assets only. This is also good news for British expats as well as non-residents with French mortgages.

Why is this important?

As stated above, the current wealth tax – Impôt de solidarité sur la fortune (ISF) – is soon to be replaced by the incumbent president’s Impôt sur la fortune immobilière (IFI). Apart from the rebranding, there are some changes to how this tax will be calculated. The current system is levying all the assets that one possesses whether in France or abroad (if a resident). The new tax will no longer apply to liquid assets. Instead, only real estate assets will be subject to tax in a bid to attract high net worth individuals back into country, having left France to shield their assets abroad in countries such as the UK. The revenue will come down to a mere €1.5bn, while the framework and scale remain unchanged.

How does the French Wealth Tax affect me?

If you’re thinking of buying a property in France or if you already own one, it might be subject to the new IFI. However, you are exempt from paying the IFI tax if the net property assets are inferior to €1,300,000. Below you will find a threshold tariff table. 

The threshold net value subject to tax Tax rate
Up to €800,000 0%
From  €800,001 and €1,300,000* 0.50%
From €1,300,001 and €2,570,000 0.70%
From €2,570,001 and €5,000,000 1%
From €5,000,001 and €10,000,0001.25%
Above €10,000,000 1.5%

*This will only apply if the net property value is at €1,300,000

The bigger picture

It’s worth considering taking a mortgage on your property even if you can afford to pay for it with cash. This will help you avoid paying the wealth property tax for potentially several years. We can put you in touch with the right person to speak about your options. For French mortgage rates, please consult our best buys table.

French mortgage interest rates unlike to rise in short term

 What’s happening here?

The European Central Bank (ECB) has announced recently that it will take cautious steps when considering raising the interest rates.This slow approach will ensure a continued growth of the eurozone economies and avoid repeating the mistakes of 2008 and 2011.

Why is it important?

Ever since the financial crisis of 2007, the ECB have acted to support and protect the economies of the eurozone by buying different types of securities, especially government bonds, to keep the interest rates as low as possible. This in turn pushes people to spend more, for example, by borrowing more money and therefore contributing to growing the economy. This programme – quantitative equity (QE) – is expected to last at least until September 2018. It comes as a surprise to some analysts who expected the bank to start withdrawing its aid system sooner due to the Eurozone economy showing strong signs of growth.

How does it affect me?

This is good news for people looking to buy property in France. With the bank promising to spend €30bn a month on buying bonds, the interest rates will not rise across the Eurozone, at least not drastically. This applies to any type of loan and especially to interest rates for French mortgages. Commentators in France have noted that interest rates slightly decreased in October and now, on average, you can obtain a French mortgage interest rate in the region of 2%. The president of the ECB, Mario Draghi, has said that it is likely the bond-buying scheme will continue beyond September next year. With this in mind, borrowing money in euros looks set to remain attractive. This is especially true because of the continued strength of the euro despite the uncertainty of Brexit negotiations. Furthermore, French property prices, which have seen healthy growth in recent times (cf. 7% on average in Paris alone), are a good investment alternative to make your money work harder as opposed to the low-yielding savings accounts.

The bigger picture

The ECB has been criticised for not outlining a more daring programme to scrap QE. Especially when the Federal Reserve Bank, has already decreased its buying scheme. The American economy has continued to show strong growth in year to date. In spite of this sceptical view from economists, the ECB’s announcement translates to greater stability of the countries with common currency and fingers crossed avoiding stagnation of the economic growth.

Record-level of borrowing in sight for 2017

What’s happening here?

With French mortgage interest rates just above their all-time-lows, the number of new mortgages in France is set to reach a record figure of €260 billion in 2017. This is due to favourable market conditions with French and international buyers who are keen to capitalize on cheap mortgage rates, well priced property and stable price increases.

Why is it important?

The French mortgage market has been extremely active in the last year. Despite the recent slowdown over the holidays, the total amount of outstanding loans in France reached €935 billion in August – a 6% increase for the same period year-on-year. Since the beginning of 2017, the total value of registered new loan offers in France has seen an incredible 50% increase totalling €210 billion for the year to date. Even in the most conservative scenarios, the predicted cumulative sum of new house loans will surpass the previous record of €251 billion set in 2016, according to Les Echos.

How does this affect me?

With the end of the year looming, the French banks are keen to finance projects that will complete this year to maximise their revenue towards their annual targets. This means they will be prioritising applications which they think can be completed before Christmas.

The bigger picture

In spite of the record year in progress for mortgage volumes, there still seems no immediate threat of increases to long term French mortgage interest rates. Once this Bloomberg index goes consistently over 1%, we will start to see adjustments to interest rates.

Changes to French mortgage insurance from the New Year


The so-called ‘Bourquoin’ law envisages changes to French mortgage insurance. The new legislation will allow you to swap your insurance from your lending bank to another insurer at each renewal date. The majority of borrowers choose to insure with the same institution.


From the start of next year, it will be easier to notify your lending institution that you no longer wish to use their French mortgage insurance at the end of the contract. To do that, you will have to send a letter (2 months before the renewal date) along with the new contract from your new insurer. The guarantees of the mortgage insurance will have to be at least the same as your former agreement. In theory, this will open up this rather complicated market and should play to the advantage of the loanee.


Mortgages in France must be accompanied by a life insurance policy. However with some lenders and in some cases, it is possible to obtain a loan without life insurance at lower loan to values. Examples of this would be below 50% LTV. However, this is by no means guaranteed and the banks reserve the right to insist on life insurance. With the new legislation, you could potentially obtain a lower payment rate for your mortgage insurance for your existing mortgage. You will be free to choose from an array of insurance brokers available on the market, thus potentially reducing your monthly premiums. However, French banks are hesitant to approve mortgages with life insurance from other institutions; they will not surrender without a fight and may set new conditions to the loan such as increasing the rate or the annual fees.


The French banks are unlikely to accept an overseas mortgage cover to replace a French one and changing will be difficult. This is why, as with your French mortgage, it is very important to secure the correct product from the start to avoid unnecessary complications down the line.


Read more on life insurance cover.

Paris: boom of fines for rental of tourist apartments

In one year, the number of fines relating to the rental of tourist accommodation, mainly via Airbnb, has multiplied by thirteen.

Parisian authorities are watching the market, and seeking out illegally rented properties. According to the daily newspaper Le Parisien, the number of fines related to the failure of declaring tourist rental accommodation (eg. on Airbnb) or exceeding 120 rental days permitted by law, has increased by 13 times.

The agents of the Directorate of Housing and Habitat (DLH) have hence pinned 31 owners condemned to pay the City a total of €615,000.

Clearly, the numbers are exploding. In the first half of 2016, the city “had recovered only €45,000”, which is 13 times less than in 2017. In Le Parisien, a deputy of the mayor of Paris indicated that this explosion of convictions does not show that there are more illegal rentals, but “that the controls are stricter and that more people are getting caught”.

However, according to the DLH, it is, above all, the punishment which is more severe. Also, multi-owners are most often targeted, says the mayor of Paris. The Council of Paris voted unanimously on Tuesday 4 July, for the establishment of the “Airbnb decree”. This obliges all renters of tourist accommodation to register online – and only online – with their town hall before publishing an advertisement on platforms such as Airbnb or Abritel.

Real estate credit rates slow down

The majority of banks have not increased their mortgage rates, according to the figures reported this week by major brokers. Good news for individuals who will have to keep an eye on some hot issues.

Those who are on vacation and thinking about buying a house soon, don’t worry! The summer period, usually more agitated in terms of mortgage rates, is rather quiet.

The average rates out of ten (1.30%), twenty (1.80%) and thirty years (2.85%) show very slight increases, but not enough to curb the borrowing capacity of purchasers. Over the last fifteen and twenty-five years, rates remained stable at 1.55% and 2% respectively, according to Empruntis. “It is interesting to note that this year we are not witnessing the traditional hike in rates imposed in previous years by banking institutions in the course of the summer, in order to try to discourage those least motivated, emphasizes Maël Bernier of Meilleurtaux.com.

Why have rate increases calmed down? Because OATs, on which financial institutions rely to establish their mortgage lending rates, are still at very low levels (between 0.8% and 1%), although they have risen somewhat in recent months. This allows banks to maintain a comfortable margin, which maintains low rates for individuals, offset by strong increases in real estate prices, in Paris as well as provincial cities such as Bordeaux or Rennes.

France’s new highest tower

After six months of negotiations, the French oil group Total has chosen its new address for its future headquarters, which will come out of the ground in 2021. If Total changes tower, it will remain at La Défense.

This is good news for La Défense, which continues to confirm its position as Europe’s leading business district. In fact, the economic lung of Paris will host a new giant tower in the next four years, in which Total will set up its headquarters. The group wishes to move Michelet and Coupole towers, considered to be ageing, where they have stood for more than thirty years. The management had offered for employees to choose their new place of work, among three possible projects.

Employees were given the choice between the Tower Sisters by architect Christian de Portzamparc, a 125,000 sqm office campus within a large 9-hectare park in Nanterre, and the “Link” tower developed by Groupama Immobilier. This last project was selected. In all, nearly 6,000 employees will be grouped together in this skyscraper of 244 meters in height, which will dominate the sky of Paris by 2021. The First tower, 231 meters high, will thus lose its title of highest tower of France.

The project is to be built in the Michelet district of Puteaux, on the edge of the circular boulevard, on the site of the current Michelet building, which houses part of the Groupama offices. The tower, which along with the First tower, will form a symbolic gateway to the district, will be visible from all over Paris, and will thus constitute a new landmark in the sky of the capital.

Record real estate transactions in France

More than 900,000 transactions have been carried out in the last twelve months in France, according to a note published by the notaries of France. A figure clearly higher than the 880,000 sales anticipated beforehand.

Between May 2016 and May 2017, 907,000 real estate transactions were carried out in France, according to a note of conjuncture of notaries of France published this Thursday. A historic record that exceeds the volume cumulated a year earlier (824,000 in May 2016). This performance is all the more unexpected since the last prospects of notaries, which result from the number of pre-contracts (documents whose signature precedes that of the deed of sale), anticipated a volume of transactions close to the 880,000 sales.

In any case, this surplus of nearly 30,000 sales shows how much the French have rushed to take advantage of the borrowing rates which, despite the slight rise at the beginning of the year, are still favorable. “There is no shortage of goods to sell, but properties are snapped up very quickly by investors, explain notaries. This situation results from sales that are made without negotiation, pulling prices upwards.

Artificial intelligence on the up in our homes

Estimated to be $19 billion by 2022, the artificial intelligence market is beginning to focus on the home. One company has designed the first virtual emergency store.

Will the house of the future be hyperconnected and intelligent? This is the bet that many French companies are making, whose innovations aim to make our life easier in our house. For example, HomeServe, in partnership with the European leader in natural language understanding Recast.AI, has developed a virtual assistant that offers solutions to solve domestic problems in an emergency.

Named “Tom”, this artificial intelligence takes the form of a “chatbot” on the model of messaging applications like Messenger or Whatsapp. The user explains the problem they face by message to artificial intelligence. From this information, Tom identifies the fault and makes a diagnosis. He then offers the right service, with a personalised quote and a fixed price. The client can then plan the intervention of an accredited professional close to home in order to solve their problem.

If you didn’t have hot water anymore, you’d probably know you’d have to call in a plumber, Tom only confirms what you already knew. But this new virtual assistant also finds you one, tells you how much a professional will cost and allows you to schedule an appointment.

Tom’s software, which integrates more than 450 incidents, is able to manage a conversation flow by adapting itself to the language of the user. The skills of chatbot extend today to plumbing and will expand tomorrow to heating and air conditioning.

“Tom is a self-learning bot that improves understanding and efficiency almost in real time,” says Linda Ghodbani, Director of Digital & Innovation. It thus deduces the intentions of the user to establish the final diagnosis and propose the good performance. The integrated payment on Messenger is not yet available in France, the internet user will have to finalize its transaction on the website depannetmoi.fr, to which the software is affiliated.

Paris now intends to reinvent its basements

The Paris City Hall Anne Hidalgo launched on Tuesday a call for “urban and innovative” projects to “build the Paris of tomorrow” within the framework of the “Reinventing Paris” initiative, which this year focuses on the basements of the capital city. “Paris will never be a finished city,” said Anne Hidalgo at the Arsenal Pavilion (4th) at the launch of the second edition of the initiative after the “success” of the first, launched in 2014. 34 sites “to reinvent” by teams of architects, urban planners and artists were unveiled during the presentation.

Mrs. Hidalgo praised a “new method” based on the partnership between various actors to “make a city”. For the second edition of the initiative, the city of Paris has partnered with several companies including RATP, Renault and SNCF, who have suggested several sites to be renovated. For example, RATP suggested “ghost stations”, such as the Champ de Mars metro station in the 7th arrondissement, opened in 1913 and closed to the public since 1939 because of its low frequencies, and the Croix-Rouge station (6th), which already hosted an exhibition in 2007. SNCF has suggested the site of the Esplanade des Invalides, a vestige of the 1900 universal exhibition, which has 18,000 square meters of basement.

Paris’ top floor apartments are 19% more expensive than on the ground floor

We all know that the higher the floor an apartment is located on, the more expensive it is. The sunshine is more important and the view more pleasant. But this comfort has a price. How much? 5%? 10%? Or more? Answer: The difference in price per square meter between the ground floor and the top floor in a building with elevator is 19% in Paris and 15% in the province, according to a study by MeilleursAgents.

For example, for a 50 sqm Parisian apartment located on the ground floor of a building with an elevator, an individual will have to pay, on average, €380,750. For the same apartment, located in the same building but on the 6th and last floor, the price climbs to €452,700. “The ground floor is less in demand because there is more nuisance, but it allows you to afford an extra room for the same budget compared to the top floor,” explains Sébastien de Lafond, president of MeilleursAgents. On the top floor, you will have one room less, but will have better views and more sun”.

Rest assured: if you own a ground floor flat, you can still find a tenant. It’s all about price. To hope to sell it as well as possible, your apartment must have access to a private space. The discount per sqm compared to a top floor flat is lower for a studio than for a large apartment. Small areas are mainly for investors and their tenants are less reluctant to live on a ground floor because they do not generally commit long term.

Record in sight for prices in Paris’ resale buildings

As interest rates continue their slow recovery, prices for resale homes are expected to break all records in the capital next summer, with a price of €8,800 per sqm, with an annual increase of 7%, according to estimates by notaries. It’s enough to crush the hopes of potential buyers, whose purchasing power has already begun to decline, as well as slow the growth of the real estate market.

In the first quarter of 2017, prices for resale apartments in Paris were €8,450 per sqm after rising 5.5% year-on-year (compared with 3% for France), in large transactions – over 10,000, a new record for a first quarter. Thus a new historic record of the price of apartments would be reached next summer, the previous summit dating back to summer 2012, with €8,460 per sqm.

After experiencing “slow erosion for three to four years” and going down to €7,880 per sqm, the prices of apartments in the capital have been rising since the summer of 2015 and have thus recovered in the first quarter of 2017, the highest in less than two years.

Prices already fell in the most affluent neighborhoods: they exceed €10,000 per sqm in seven districts, of which four (1st, 4th, 6th and 7th arrondissements) are more than €11,000 per sqm. In the last quarter of 2016, the capital had only two districts at more than this amount: the 6th and 7th arrondissements. Conversely, only 4 districts remain below €8,000 per sqm: the 13th (€7,740), 18th (€7,580), 19th (€6,910, the cheapest in the capital) and 20th (€7,380).

Paris in the new race for skyscrapers

The Palais de Justice inauguration, construction permit for the Triangle tower, the start of the Duo towers project: skyscraper projects flourish again under the sky of Paris, 44 years after the emblematic and unpopular Montparnasse Tower (210 meters high). A few meters from the construction machinery plowing the ground, in the 13th arrondissement (south of the capital), the aedile Anne Hidalgo savors his victory.

On Thursday, the mayor of Paris recalled the “controversy” and “long and violent debate” during a ceremony regarding the first groundbreaking project of the future Duo towers (180 and 122 meters) designed by architect Jean Nouvel. ” We wondered: Do we have the right to imagine contemporary architecture in Paris?” which was then only adjoined to the urbanism of its predecessor, Bertrand Delanoë. “I am not a huge fan of the towers, but I had to allow the freedom to lift the taboo of tall buildings to create a modern city of the 21st century. We fought this fight and we won it.” Overlooking the peripheral boulevard and railway tracks, the Duo towers, partially leaning “to capture the reflections of cars and trains, day and night”, will house 85,000 sqm of offices and another 30,000 sqm of shops and a hotel-restaurant.

The era of controversy seems to have passed as three 160-180 metre tower projects are now underway in the capital, including Duo, built by Ivanhoe Cambridge, which will be finalised in 2021 and will become the Natixis bank headquarters.