French Mortgage rates: Confidence returns in 2013

French mortgage rates saw ultra-low levels for much of 2013 which helped to sustain a muted first part of the year. It was during the last 6 months of the year that French mortgage applications really took off,  coinciding with a better economic outlook in the UK. All our partners reported a huge increase in interest, our own figures reflecting this with a surge in completions, which are continuing into 2014.

 

Simply based on completed applications at the bank, we can forecast that the volume of transactions in 2014 will double if not triple the volume of 2013.

 

So what is the reason?

The past five years have seen lower levels of property transactions as people have adjusted to the crisis, adopting a ‘wait and see’ attitude, even if the funds were available to make the purchase. These buyers are now off the fence in force and not just buyers from the UK but the USA and many expat centres.

 

Increase in cash buyers

2013 saw a larger amount of cash buyers in the market than in previous years. This trend looks set to continue, though at the super prime level many cash buyers still put finance on the property to avoid French Wealth Tax. This annual tax is levied on net assets in France over the value of €1.3M and it is often better to use a loan especially if renting the property out.

 

Predictions for 2014

The market is extremely active at all levels in comparison to 2013 and we see this continuing. French mortgage rates are creeping up a bit but you can still fix your interest rate for 20 years under 4%, with variable options from approximately 2%, I do not think this will affect the market much. We believe this year will be strong for property sales in France and whilst we are not back to pre crisis levels of transactions the market has certainly rebounded strongly.