French Mortgage market trends: Banks tightening policy

The market for French mortgages is in good health as we pass the half way mark for the year. Most currencies have strengthened against the Euro meaning it is cheaper to make deposits on properties and the net cost of mortgage payments is also less. The pound is at a 19 month high against the Euro, in case you hadn’t noticed… The horizon for rate increases still seems a way off and mortgage rates remain at their historic lows. So for the meantime the buying conditions in France are improving overall.

On the flip side, this month we have noticed a tightening of bank policy towards accepting clients for French mortgages and some leaseback companies. Attitudes amongst many of the banks have now changed at there is more caution in the air. Now more than ever it is important to check your situation out with us before moving ahead to ascertain that there is margin in your application to ensure your loan is approved.

As we all know the past 18 months have been uncertain times in which the economy has slowed considerably. This has meant a reduction in gross profit for many self-employed borrower of the period 08/09. The reduction when taken in context with other years of business may seem reasonable given the economic context. However, we have seen several borderline applications refused due to “significant reduction in net revenues” over the past month. This indicates a returning level of conservatism on the part of the French banks which saw it almost impossible for self-employed borrowers to find loans in France in the mid-nineties. For salaried borrowers, revenue will have remained constant over the period but borderline cases are harder now to pass through the bank’s lending committee.

It is definitely recommended for self-employed borrowers to run their applications passed one of our brokers in order to avoid being refused. Our brokers have experience of the current market context and find appropriate loans for self-employed borrowers and those seeking maximum loans every day.