The French mortgage sector in 2021 has been full of contradictions. It has become a lot harder for Brits to obtain a French mortgage since the UK left the EU. Yet for some brokers, the year so far is in line with French ski property sales and new records are being set.
“Since Brexit happened there are fewer French banks working in the overseas buyers’ market and the ones that still do have become stricter,” comments Matthieu Ragon, General Manager at French Private Finance. “Within what was already a very transparent market, the compliance and risk teams are now doubling their efforts to ensure that there is absolutely no doubt of a client’s profile.”
As always, it depends on what you’re buying, where the property is located and also your profile. “Those targeting properties above €1.5m will find the best deals, but there are still great options for those with smaller budgets,” adds Ragon. “The problem is with the number of options there are.”
With fewer banks offering overseas mortgages in general, there are simply fewer directions for buyers or brokers to turn should an application not go through with one bank.
“You now normally have two ways to go: bank A or bank B, and if neither works out there are few places to go after that,” continues Ragon. “The location of the property still matters too. Whilst there is no such thing as a buy-to-let mortgage in France, banks look more kindly on properties that are located in areas of high tourism as, long-term, the chances are that these will generate rental income to support mortgage payments. The French Alps, Paris and the South of France are on the list. The sharpest end of this more restrictive market has therefore fallen on those buying in more rural areas, or at least ones that see less tourism. If you’re looking for a €300,000 mortgage for a property in Brittany for example, it is very difficult at the moment.”
Despite what is an increasingly restrictive dynamic in the French mortgage market, at Athena Advisers, the first five months of 2021 have not only seen the largest volume of French ski property buyers in our history, but also the highest ever proportion of clients using finance. More than three quarters of our clients (78%) opted to take a French mortgage over purchasing with cash, compared to 68% last year and 65% in 2019.
French Private Finance’s numbers echo this trend with the company expecting 2021 to be its biggest year on record. “Based on the year so far, we’re projecting 2021 to be over 200% up on 2019 and more than 60% up on last year,” adds Ragon.
Considering lockdowns and travel restrictions, it’s clear that buyers are returning to the market. “There’s a sense that people are catching up from 2020 and now getting on with their plans,” continues Ragon. “British clients were also waiting to see the effects of Brexit on aspects like tax and residency, so this, combined with our working from home dynamic and people generally being more used to current times, means they are applying renewed vigour to their dreams of owning a French property.”