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 brought 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.
The Brexit referendum is likely to cause instability in the GBP EUR FX pairing and will probably lad to some fluctuations in the French home market because the number of UK passport holders with French second homes is quite large. At this point it is very difficult to predict the net effect but instability always throws up excellent buying opportunities so be prepared.
Eurozone Crisis Makes Way For Brexit And China
US interest rates have started rising and the French banks continue to tell us that their funding crisis is over and they feel able to start increasing their French mortgage lending.
You can follow progress on this on the ECB asset quality review page.
The newfound confidence of the European banks has already lead to the development of new French mortgage products.
The first two new products we have seen in 2 years are:
- A hybrid mortgage granted on a 50/50 split between capital repayment and interest only.
- An interest only (crédit in fine) product for refinancing.
These products underline a growing confidence in the French mortgage market.
Against the good news:
- The forecast for the global economy has become less clear with worries over commodity and oil price oversupply.
- China seems to be facing real challenges in maintaining growth as the economy pivots from capital investment led growth to consumer led growth in an emerging services economy.
- The BRICS (Brazil, Russia, India, China and South Africa) seem to be in various states of difficulty with the only apparent source of good news being Modhi’s India.
- After tax income for most of the French, and Europeans generally, is still not rising appreciably post 2008 and people do not have a “feel-good” psychology.
- The Brexit debate will probably not help the markets view of GBP, so we expect to see a wider than normal band of exchange rate volatility the GBP / EUR exchange rate bouncing between £1=€1.21 to £1=€1.49 though with the most likely value being closer to £1=€1.30 in the near term but if you are thinking of moving between GBP and EUR read our FX (Foreign Exchange) page and watch the EUR / GBP futures market closely.
We are now seeing a significant toughening of mortgage qualification requirements accompanied by a tightening in the LTV (Loan to Value) ratio for some clients.
Taken together, the changes signify a drive to quality which will work in favour of well qualified clients buying prime property in good locations.
See our latest French Mortgage Rates for more details of the best French mortgage rates.
French Property Market Has Turned
The 2015 Q3 French property market data is now out and we believe it signals the turning point in the market.
There are two very positive signs:
- The continuing very low Euro interest rates
- The first signs that liquidity is returning to the French property market after a period during which it could take from between 2 to 5 years to achieve a property sale at any price. In some regions asking prices have stabilised and in a few are beginning to move gently upward.
How French Estate Agents Read The Market
- 70% of French estate agents are achieving their French property sales targets, which suggests that the French property market is beginning to move again.
- 74% French estate agents think the French property market is either stable or improving.
- 63% of French estate agents describe themselves as optimistic, a 28% improvement since Q1 2015.
Conclusion
The French property market is certainly showing the early signs of spring and anecdotally we now have confirmation that French estate agents are hiring again in many regions of France.
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 will be your last chance to grab that bargain.