Market Update from December 2023

Posted on 11 Dec 2023 in French Private Finance
Market Update from December 2023

‘Tis the season! 

2023 is almost in our rear-view and it’s been… (fill in the blank). What to expect from 2024 on the French mortgage market?

I sat for a while thinking about how I could review 2023 so I decided to look at how I reviewed 2022 12 months ago.

My introduction was the following: ‘’2022 was challenging at times for those looking to finance their French property purchase. However, whilst conditions will remain tight as we move into 2023…’’  Talk about an euphemism!

In 2023, we witnessed a brutal increase in the mortgage rates in France (and anywhere else, to be fair) – going from 2.80% fixed for 20 years on a repayment mortgage to 5.20% on average – and many French banks have strengthened their policies to reduce their lending / risk exposition. It’s been tough to say the least.

On the bright side, a prolonged increase on the rates is generally accompanied by a price decrease on the properties. Negotiating the price down by 15% can offset a rate increase of one point (+1). It has become quite a “buyer” market especially for those who could bring in a bigger deposit. Most of our High Net Worth clients took a mortgage with a 50% LTV or less: they wanted to reduce their overall interest costs while still benefiting from tax advantages thanks to the mortgage and keeping some investment portfolio to work for them. 

The French Alps market is however still strong where prices have even slightly increased, due to the fact that  buyers are less depending on mortgages and therefore the economy there has not slowed down.

What about the inflation? We have already seen the inflation rate in the UK almost halved which created a reduction on the mortgage rates. 

How does it translate to France? Well the inflation rate in France has been (overall) reducing over the past 9 months and yet the mortgage rates have been increasing for 11 months in a row. So the relation between the inflation rate and mortgage rates in France is much different than in the UK. 

In 2024, many experts believe that the mortgage rates will go down from the second quarter (though no one has a crystal ball to confirm it yet). 

What I can however believe is that one of our main lending partners has acquired a renowned banking group. This move should give them more flexibility and creativity on the non-resident mortgage market so stay tuned to hear more about potential new products availabilities.

LTV update

We are able to offer up to 85% LTV for repayment mortgages, with a fixed rate up to 25 years.

However, it is safe to assume a deposit around 30% minimum all fees included and a bit of “cash” collateral invested with the bank to sweeten the deal.

In general, LTVs are between 70% to 80% maximum though.

Rates update

The rates have increased earlier this month and so has the taux d’usure, though it still provides a challenge to the French banks to find profitability. 

French mortgage rates are now going from 5% to 6% fixed for 20 years on a repayment mortgage.

Please see the updated rates table below. Further rate increases are likely over the course of the year and rates can only be secured once a mortgage offer is issued.

Let’s take a break

Private Finance Group will be on ‘’save power’’ mode from December 23rd to January 4th 2024.

So for now, I wish you all a Merry Christmas and hope you have a good holiday season!

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