Market Trends is the regular macro-economic review of the developing trends affecting French Mortgages, particularly trends likely to affect French Mortgage Rates and French Mortgage Products.
Overview
In Market Trends January 2015 I focussed on the two long term trend scenarios in the market: Business as Usual and Reversion to History models.
Market Trends April 2015 brings you the first hard data that will help us to predict which way the market is moving, even though it is still too early to call the trend definitively.
End of the Eurozone Crisis
It may not feel like it to you and me but the banks are now telling us that, for them, the funding crisis is over.
As evidence, they cite the return to near normality in the wholesale funds market, the conclusion of the ECB asset quality review and stronger balance sheets.
The newfound confidence of the European banks is already leading to the development of new French mortgage products. The first new product we have seen in 2 years is a hybrid mortgage granted on a 50/50 split between capital repayment and interest only.
We are also seeing a very slight softening of mortgage qualification requirements accompanied by a small relaxation in the LTV (Loan to Value) ratio for some clients.
See our latest French Mortgage Rates for more details.
French Property Market Turns
The 2015 Q1 French property market data is now out and though it is not entirely good news it is certainly encouraging and may signal an imminent turn in the market, perhaps as early as 2015 Q3.
The first positive sign is the confirmation that Euro interest rates are low, very low.
The second positive sign is that low interest rates have driven down the cost of financing a French property purchase. The following graph, by way of example, shows how much the financing costs for a €250,000 property have fallen since 2012.
The third positive sign, at least for house buyers, is that French property prices for much of France are back at 2010 levels.
Finally, there is a fourth positive sign, especially for house sellers, which suggests that after years in the doldrums the volume of property transactions is at last starting to rise with a near 5% increase expected this year.
Conclusion
Taken together, the above suggest that the French property market is showing the early signs of spring and anecdotally we have heard that French estate agents have started hiring again.
If you’ve been waiting for the low point in the property market cycle to grab your French property dream at a dream price you may find that now is the time to make a move.