Market Update from September 2023

Posted on 15 Sep 2023 in French Private Finance
Market Update from September 2023

C’est la rentrée!

Following a strange summer where we witnessed 4 different seasons in the span of 6 weeks, we are once again in September: kids are back in school, the house feels empty and silent and the extra curricular activities are taking over. 

But what about the French mortgage market?

  • The rates are still increasing (more below) as it has been the trend in 2023. Speaking with banks, they predict a stabilization (maybe even a reduction) early 2024. Of course, they don’t have a crystal ball either so we will have to wait and see.
  • French banks are reducing their lending envelope in general due to the lack of profitability on vanilla mortgages. Therefore, many of them require a cash collateral to boost their return.
  • The price of the properties has seen a decrease in cities considered expensive (Paris, Marseille, Lyon, Bordeaux) and notaires believe the price will be reduced by at least 5%. Some regions in the countryside are affected as well – such as La Dordogne. A price reduction of 5% on a 400,000 € property makes up for an increase of +0.5% on the rate over 20 years for a mortgage of 300,000 €. This is a good balance (we have to take the win when / where we can).

However, the French Alps and the French Riviera seem to be immune at the moment… They are markets of their own.

LTV update

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

However more and more banks are asking for a pledged collateral in cash on top of the deposit so it is safe to assume a deposit (all included) around 30% minimum.

Rates update

The rates are increasing still (for a 8th month in a row) and so is the taux d’usure, though it still provides a challenge to the French banks to find profitability as the refinancing rate is around 3.3% (the banks usually use the SWAP 7). French mortgage rates are now around 5% fixed for 20 years if you buy under your personal name or around 5.8% fixed for 25 years if you buy with a French limited company.

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