04 January 2016 - Mortgage France News |
What 2016 has in store for the French Mortgage market
As 2016 gets underway, many of you will be deciding whether or not this is the year to purchase a property in France.
The decision of whether or not to go ahead with a French property purchase often depends on wider economic factors. Here, we will discuss how French mortgages look right now, and point out certain issues that may affect buying a property in France over the coming year.
Interest in French property among international buyers went up during 2015. The most obvious reason is that the euro weakened against other currencies, meaning that the buyers’ savings could go further towards their purchase. Similarly, this meant that their income levels could also support higher French mortgage repayments.
The European Central Bank is continuing with a policy of quantitative easing into 2016. This will have the effect of keeping the euro relatively weak, so both French property and French mortgages should remain affordable in 2015 for international buyers.
The result of all of this interest from abroad is that the French property market is generally performing well. Other important markets around the world – such as in the UK and USA – are also performing strongly. This means that confidence is up and French property prices are stabilising after the economic troubles of recent years.
So, in general terms, it is certainly a good time to buy and to take out a mortgage in France. Yet there are certain events coming up that may affect this overall situation.
New rules on taking out a mortgage on the continent will come into force in March. Known as the European Mortgage Credit Directive, these changes are likely to make using a broker more popular. An expert French mortgage broker will be able to guide you through the application process and explain any rules that may be new and unfamiliar to you.
It is also expected that Britain will vote whether to remain part of the European Union at some stage in the year, most likely in May or September. British buyers interested in a property in France should be aware that the uncertainty created by this referendum may weaken the pound. This could make buying and taking out a French mortgage temporarily more difficult.
It is hard at this stage to predict what effects Britain’s departure from the EU would have for Brits who wish to buy property in France. It may well result in it becoming more difficult just to travel to France, let alone to take out a French mortgage. Yet the popularity of France means that British people are sure to find a way to overcome these problems.
Staying in the UK, a new 3% stamp duty charge on the purchase of second homes will come into effect as of April 2016. This will not directly affect the purchase of a second home in France. However, properties owned abroad will come into consideration when the decision is taken whether to apply this new charge to a purchase in the UK.
Interestingly, this 3% tax duty will raise the cost of buying a second residence in the UK to a similar level as it is for such a property purchase in France. If the pound remains strong against the euro, this could make France the more attractive option for British second home buyers.
Finally, the French are set to vote for a new president in 2017. Such events tend to cause uncertainty in financial markets, meaning that potential buyers may wish to proceed with that French property purchase sooner rather than later.
As always then, there are many different factors that could affect your French property purchase in 2016. If you have any doubts about which ones may affect you, and whether you qualify to take out a French mortgage for the transaction, why not pick up the phone today and call the experts at Mortgage France?
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