French Mortgage Watch – April 2015

Belle Plagne properties for sale

Ski season update — for those in the snow

As the ski stations and villages in the Alps close and the final end of year parties wind down in the highest resorts of Val Thorens and Val d’Isère, we can reflect on not only a good season’s skiing but also an excellent period for buying property in the Alps.

Who is buying?

According to our statistics and 65 million euros of transactions sent to the banks, the age of the average buyer is 45 years old with a combined household income in the region of £200-300k per year. The average deposit placed to complete the purchase was in the region of €250,000 for an average purchase price of €620,000 which is an increase of around €200,000 on 2014’s figures. Already this year it is clear that the increased affordability in the mortgage market and boosted buying power of non-euro currencies are enabling non-residents to reach higher in the market. 74% of buyers were UK residents and 77% were British. The Dutch, Americans, Irish and French make up 15% with a spread of nationalities for the last 10%.

Outlook

Although, there was a considerable spike in alpine purchases during the ski season people purchase ski property all year round and whilst the number of enquiries has begun to slow for ski property there is still healthy demand. Excellent mortgage conditions are still the norm with a 9-year interest only mortgage fixed at 2.5% for the term of the loan. The euro remains weak and is driving sales with the prospect of the prices increasing over the medium term when the wave of printed money meets the mountains.

ski season
French Mortgage Best Buys
Repayment
RateDurationLTVDescription
1.95%20 years80%Tracker mortgage 3m euribor +1.9%
2.05%25 years80%Tracker mortgage 3m euribor +2.0%
2.55%25 years85%Rate capped + 1.5% for 10 years
2.7020 years80%Rate fixed for the term
2.85%25 years80%Rate fixed for the term
3.20%25 years85%Rate fixed for the term
Interest Only
2.20%15 years70%Tracker +1.95%
2.60%15 years75%Tracker 3 month Euribor +2.55%
3.45%15 years70%Fixed rate

France in the Press

The French economy takes centre stage this month as savings plans are announced amongst differing views on the right way to move forward.

Bank of France’s Noyer: Economy can grow 1.5%

France’s Economic Recovery Will Remain Modest

France unveils multibillion euro saving plan to cut budget deficit

Property of the month

img-property-for-sale-chalet-villaret-megeve
Megève
Chalet Villaret – €4.95m

  • Up 80% LTV mortgages available
  • 300 sqm south facing & 6 ensuite bedrooms
  • 5 mins from the slopesFind out more

From the blog

Transaction of the month – 2.55% remains the
popular deal

Fixed 20-year mortgages become the most popular product as
non-resdient buyers continue to get the most out of the market.
Read more

Housing sector improves in France

The latest figures from INSEE released on Tuesday 28th April have shown that the housing situation in France is mixed but improving.

Read more

Five steps to help you enjoy your golden years abroad

The Telelgraph.co.uk has recently highlighted five steps relating to money and property for Brits who want get the most out of their golden years abroad.

Read more

Affordability of French mortgages highlighted in Financial Times

The value in the French mortgage and property markets just keeps growing and growing, as recently highlighted in the Financial Times.

Read more

Rate and indices

European Bank Base Rate and Euribor
After hitting lows of 0.001% a few times already this month the 3 month Euribor is now at 0.005%, still very low. The vast majority of all French mortgages use the 3-month Euribor as their reference index with a margin added on top. Current margins are in the region of 2% over the 3 month Euribor.

french mortgage interest rate

Fixed rate mortgages: The TEC 10 index

After a hitting an all-time low of 0.33% this month the Tect 10 has stabilised a little to 0.48%, yet is still at relative record lows. The TEC 10 index in France gives an indication of how much the French government is charged to borrow money on a 10-year basis. In this way it is also an indicator of economic confidence and the perceived outlook for growth. Movements in the TEC 10 often produce changes in the available fixed rate mortgages in France. These changes are not instant and usually take a few weeks to come into effect..

french mortgage financial

Currency Rates vs Euro

It’s been an eventful few weeks in what has been an eventful year so far for the euro. In the last month alone, against the pound, the euro has been down at 0.7073 and as high as 0.7363. To put that in some context, when transferring €100,000, that equates to a difference of nearly £3,000.

EURUSD is a similar story. In the middle of March, a rate of 1.0493 meant €100,000 was worth nearly $105,000. Earlier this week, the same amount was worth nearly $5,000 more.

The improving data and liquidity provided by the central bank has prompted Goldman Sachs to describe the European economy as being in a ‘sweet spot’ for growth, which you would struggle to argue against given the extraordinary stimulus being provided. We shall see if this translates into a stronger single currency.

Currency

GBP1.39
USD0.90
AUD0.72

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