08 August 2018 - Partners News |
French Mortgage Market Update
- As part of the ECB’s announcement back in March regarding their bond buying programme, they stated that they didn’t see interest rates rising until April or June 2019. However, as Europenan mortgage pricing is, (like in the UK) based, in part, on future expectations of interest rate movements) the majority of the European lenders we have talked to have predicted a slow and slight rise starting in 2018.
- There is a greater appetite to lend to non-residents across all main European markets, as indicated by recent movements in LTVs and rates and a loosening of certain lending criteria
- French lenders are evaluating the eligibility of clients with a BTL portfolio in a more ‘generous’ manner. They are also less prescriptive than UK lenders when looking at existing interest-only debt, basing their decision more on the liquidity and value of other assets, rather than strict income multiples
- Banks are also becoming more open to the use of pensions: We have had success in obtaining a mortgage where the client’s pension was on a Flexi-drawdown but no income was currently being taken
- Testament to the demand from British borrowers the French banks have positively changed the criteria and products available for re-financing an existing French mortgage.
- Until recently, clients currently on an interest-only product had no choice but to change on to a repayment vehicle or pay of the capital balance. Now they can refinance onto a new interest-only mortgage subject to certain conditions.
- For many clients that took out a fixed rate 4 – 5 years ago, it is still possible to make massive savings by refinancing and anyone on an old variable rate can generally fix for the life of the remaining term for less than their existing margin.
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