Borrow less, for less time.
The trend for individuals seeking to take a mortgage is to borrow less capital on a shorter duration. The statistics also indicate that individuals are opting for the shorter loan terms to benefit from the favourable conditions offered by banks. Only 13.8% of requests were for a 30 year term on a repayment mortgage in October, against nearly 15% in January, and the average duration requested fell in October to 244 months against 259 in January 2011.
A softening of underwriting criteria?
Contrary to popular belief, banks want to lend to customers at low rates. Mortgage lending remains a good lever to attract new customers in the French domestic market that they can keep for the duration of their credit, an average of 7 years. Reports suggest that banks have not tightened their mortgage affordability requirements recently. Instead, lenders are more diligent and careful about the financial situation of applicants, which all would agree is justified in the present context. On the other hand, while looking for the best borrowers, some even have softened their requirements, offering special deals for the younger borrowers or lowering the minimum income levels to make it easier to get a loan.
|Average French mortgage amount||€168,553||€168,221|
|Average deposit amount||€67,478||€66,039|
|Average transaction amount||€251,818||€254,923|
|Average deposit rate||24.6%||21.9%|
|Average French mortgage length||18.7 yrs||18.9 yrs|
|Average income for a couple||€5,029||€5,086|
|Average borrower age||36.8 yrs||36,5 yrs|
|Borrowers less than 35 years old||46.6%||47.2%|
|Borrowers less than 30 years old||23.8%||24.6%|