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French Market Trends
	Aver loan rates	3.70%
	Aver bank margin	2.10%
	Aver house price	+6.5%*
	French inflation rate	2.30%
	ECB base rate	1%
	3 month Euribor	1.13%
	TEC 10	3.13%
*Change based on prev monthly rate

January 2012

What next for French mortgage rates as France loses AAA status?

It's the old story of a country losing its AAA status leading to ordinary punters having to pay more for their mortgages. However, the recent downgrade is not the only reason for the increases to the cost of borrowing in France. The margins banks are charging each other are also increasing as banks seek to rebuild balance sheets after losses in Greece and the economic slowdown. These increases are now being passed on to the public. The net effect is a lack of appetite for lending and borrowing in France with each application being carefully studied and selected by both banks and consumers. Bank margins over the applicable reference index have now increased by 20 basis points with the average now over 2% with many capped rates over 3% and fixed rates still looking good with margins under 2%.

French variable rate mortgages have the lowest margins of all French loans, though we are also seeing sharp increases here, even as the Euribor is decreasing. The 3 month Euribor rate has fallen 20 basis points over the last month and now stands at 1.13% just above the ECB base rate of 1%. The extra money which the ECB has put into the system has delivered the required liquidity to keep the banks lending and has also brought Euribor rates tumbling down. Further cuts to the base rate are not being priced in at the moment so we should be set for a period of stability as we await the results of the latest round of high level European talks. Needless to say base rate hikes are not on the cards either though we may see further increase to bank margins for variable rate loans which are currently in the region of 1.50% to 2%.

With fixed rate mortgages, the idea is that French banks have to pay marginally more than the government does for their borrowing so all increases in the cost of borrowing for the government are generally passed straight on to the banks. We can see these increases via the TEC10 index which gives a strong indication of 10 year French government debt and commercial bank wholesale rates before adding a margin for anyone seeking fixed rate funding from banks. October and November saw the TEC10 put on 1.50% from historically low levels of 2.50% to above 4% as the fallout from Greece continued. Since mid-November the index has fallen back to almost 3%, with a peak rate in January of 3.40% coming before the downgrading by Standard and Poors of French government debt. The upward pressure on the TEC10 will come from either the likelihood of economic improvements and ECB rate rises or worsening of the French reputation with the rating agencies both of which seem unlikely at this stage. Good 25 year fixed rates are available from 4.60% at 80% loan to value.

In terms of our view of the market, we are seeing an increase of activity and enquiries after an exceptionally quiet last quarter of 2011. We are seeing lots of activity at both the high and low ends of the market with the middle range purchase price seeing the largest decrease in terms of numbers of purchases going ahead. The market for French property seems to be picking up again with many of our partners also starting the year well. We see the outlook for French mortgage rates to be fairly stable with some upward pressure over the next six months.

Best wishes for the New Year.
November 2011

Reasons to be cheerful

So as another year draws to a close in the heady world of French mortgages, it is always useful to look back and reflect on what the year has brought us. This time last year, we were experiencing some of the lowest ever fixed rates seen in France with the record set around 3.35% fixed for 20 years. Not bad if you can get it. As inflation began to unsettle the then head of the European Central Bank Jean-Claude Trichet, we saw increases in the main ECB rate from 1% back up to 1.50%. These increases put the brakes on the mini boom in French property prices which saw Paris experiencing off the chart price rises, whilst France as a whole was ticking over at a respectable 6% average for the year.

The eventual unraveling of a policy of lack of effective decision making by the top ministers of Europe, led to the markets seizing on Sovereign and AAA debt and pushing the cost of refinancing that debt higher across the board, even the Germans pay more…The unease brought about by the sheer scale of exposure to the debts of the less fiscally responsible nations has led to increase in the mortgage rates for new customers across the board despite the recent decrease in the main refinancing rate by the ECB to 1.25% with further cuts predicted.

These cuts are not being passed on the form of cheaper variable and capped rate loans for new customers as banks maintain or increase their margins in readiness for impending new Basle III capital base ratios and to pay for the increased costs of wholesale borrowing. Competitive rates are still available for a number of local banks in France with a 20 year fixed rate possible at 4.25%. Now that's less than 1% of the all time lowest rate, there now, that should cheer everyone up!

Happy Christmas/Festive Season from all of us here at French Private Finance.
October 2011

Lack of liquidity driving up French mortgage rates but transaction numbers still increasing on confidence upswing

After an extremely quiet September, traffic and enquiries are up by more than 40% in October, with many international buyers signing agreements to purchase in France for the ski season despite the continuing Euroland saga. Wednesday's announcement of a solid plan to alleviate the Eurozone sovereign debt crisis should boost confidence in the markets by making clear that the political will is there to support the Euro – as predicted by George Soros. Overall confidence has been buoyed, with many seeing the French property market as a safe haven for investment funds

French mortgage product rates were stable during October although two banks are now set to increase rates and margins by 0.35%, attributed to an increase in the 'cost of funds' on the markets with others keeping rates stable for now.

This increase in the 'cost of funds' is an amount which is added to the index or rate at which French banks are borrowing and is a kind of risk and liquidity cost margin. This increase does not appear in any of the indices such as the 3 month Euribor, against which the majority of variable and capped rate mortgages are pegged. The reasons for the increased costs are the new banking rules on increasing the capital base for lenders. These rules have reduced the ability of banks to lend and the uncertainty of bank debts which may have to be written off due to the situations in Greece and the wider economy. This increased cost associated with liquidity has prevented long term interest rates from falling to extremely low levels again, as they did in September last year. We recently saw the TEC 10 index, which gives an indication of 10 year government bond yields and long term fixed rate mortgages, fall to its lowest ever level of 2.45% on 12 September, the previous low taking place 12 months earlier.

We may be set for a decrease in the ECB rate before the end of the year. The question is whether this will be passed on in the form of lower rates or simply absorbed into the 'cost funds'. If the liquidity problems persist, those who manage to obtain a mortgage facility will be pleased they have one, if the cost of liquidity continues to increase.
September 2011

French bank closes to non-residents, as mortgage rates set to fall further

September saw more attention than usual on the French banks as the media spotlight turned on those banks holding large quantities of Greek debt. Of the main banks under scrutiny, Crédit Agricole, has the most exposure with approximately €21 Billion in local exposure, whilst Société Générale has approximately €6 billion in local exposure and government bonds leading to a Moody's rating cut; from Aa1 to Aa2 and Aa2 to Aa3 respectively. In reaction to the market conditions many French banks have been restructuring and looking to reduce risk across their portfolio of businesses, as was previously discussed in this column in relation to French banks changing their lending criteria. A significant development in the international investment mortgage market is the news that LCL, a subsidiary of Crédit Agricole, is to close its doors by the end of the year. This follows on from Société Générale closing its international branch in March 2011.

On a slightly brighter note, it seems that interest rates could be set to fall further with the European Central Bank expected to cut rates by up to 0.50% to a low of 0.75% at their next meeting in October. With long term interest rates hovering around their historic low at 2.50% on the TEC 10, the government 10 year bond price, we can anticipate long term borrowing rates to also fall further within two months.

What this means is that, similar to this time last year, the buying conditions for French property are some of the best ever seen. With the opportunity to lock in a long term rate for up to 25 years on either a fixed or capped basis, investors and house hunters can secure an asset to hedge against rising inflation safe in the knowledge that maximum monthly mortgage costs are manageable.

French banks are still cautious about who they lend money to in the current climate, and to increase the probability of securing finance a deposit of 20-30% is recommended, although it is still possible to borrow 100% of the purchase price of the property through certain French lenders. To be considered for this level of finance borrowers would need to place between 10-20% of the purchase price of the property under the control of the bank.This investment can be kept in the currency of your choice and the target return on the money is 3-4%.
August 2011

Introducing French Private Finance by Athena Mortgages

From opening French bank accounts to French insurance products and other financial services, French Private Finance is a one stop shop for non French residents looking to locate tried and tested services and to follow best practice when buying in France.

This new service will continue to provide access to mortgages from over 50 French banks and dozens of international finance providers, to ensure you have the widest choice of lenders for your particular circumstances.

Each of our mortgage quotations displays two offers side-by-side providing easy comparison of competing mortgage products. Your consultant will help you to narrow down the 1200 available products to the few that best match your financial goals using their daily experience of this ever evolving market place.

Over the last six years of focusing entirely on finance in France - we have built many relationships within the French financial services sector. Our specialist team of brokers and underwriters will use all of their experience and relationships to put together the best package of services for you. As ever, it is extremely important to seek out the best advice possible when undertaking a purchase overseas, even more so in today's financial climate where the success of a transaction can hinge on the smallest of details.

At French Private Finance we offer access to a panel of experts who can ensure your transaction is structured to optimise the chances of success and to maximise financial efficiency in the long term.

You can now find our new website at www.frenchprivatefinance.com which offers a comprehensive range of services to UK and international buyers of French property.
July 2011

Good summer buying conditions in France

News from across the Channel is that we are experiencing good market conditions for buying French property. For the next few months at least, the outlook for rates is stable, with a chance of slightly lower fixed rates in August and September. Whilst some commentators have suggested we are seeing a bubble beginning to form concerningFrench property prices, due to the extended period of low rates, we are nowhere near the levels of price rises seen between 2002-2005 with Jean-Philippe Cotis, of the French National Institute for Statistics, not seeing any “imbalances”. The relatively small increases in both house prices and interest rates already seem to have put the brakes on the numbers of transactions in the French property market, which remain at 2007 levels with more sellers than buyers.

The Federation of French Estate Agents predicts the increase for this year to maintain the same levels seen in2010 at an average 3%-6% across France. This is largely based on interest rates which are still extremely attractive (examples below). Compared with average prices for the 2nd quarter last year, house prices are up 5% and apartments up 8.6% making an overall increase of 6.8%. Comparing July 2010 to June 2011 we find the overall increase to be +3.8% versus +1.5% in 2010 and -4.90% in 2009. These increases have brought average French house prices back in line with levels last seen in 2007 when interest rates were 1% higher on average.

Better news is also to be had on the competition amongst French banks for clients. After an initial retrenchment by the banks – in terms of strengthening of criteria due to the market contexts of an increase in regulation, the number of defaults and the cost of liquidity – there now seems to be a slight overall increase again in the levels of loan to value on offer. In addition, bank committees have also softened their approach further, with more applications succeeding first time around.
June 2011

Good news first...

The good news this month is that it seems French President Nicolas Sarkozy has decided against setting a new tax on second homes in France. Reports suggest that he has had a change of heart after strong objections from the real estate community and question marks over the legality of such a move. Still, I expect he will gain some political points for proposing it and a few Gallic shrugs for dropping it, so overall he is probably up. This news will be a boon to many existing owners in France who do not make their properties available to rent, as well as to those prospective buyers.

Now for the bad news. The rate rise is coming on July 7 when the European Central Bank is expected to increase the main index rate from 1.25% to 1.50% in spite of all the problems in Greece. French banks have been among the most affected with Credit Agricole, BNP and Soc Gen - apparently holding the most private Greek debt - now under scrutiny. Not surprisingly these banks have already made moves to reduce their mortgage lending to overseas investors with Credit Agricole and BNP withdrawing 100% finance for leasebacks and Soc Gen having already closed its international platform. This trend for tightening criteria is continuing with the withdrawal of a three-year interest only product by the Caisse d´Epargne.

The recent rate increases and tightening of banking criteria were always going to come after French interest rates reach historic lows last September. However, French finance is still available at 100% LTV for both classic purchases and investment property at rates which every British homeowner would opt for in a flash. At 100% LTV you have 4.35% capped at 5.35% for the entire 20 year duration or alternatively you can fix at 4.35% for 25 years at 80%. When you compare with the comparable UK 5 year fixed rates your eyes water as a UK home owner. The peace of mind and security offered by these sorts of mortgage products really are areas where the UK has something to learn.
May 2011

French banks tightening lending criteria

This month has seen a dip in the desire of French banks to lend to international investors. It is rumoured that some leading banks have already reached their targets for residential lending for the year already, indicating a lack of liquidity and increase in risk aversion. This is also seems to be behind a reduction in the available durations for interest only mortgages and an increase in the net assets required for a pure interest only loan from 120% of net assets to 150%. If we widen the picture we can see that at least two other banks have closed their international branches, Societe Generale and UCB, compounding the trend for an overall increase in the reluctance to lend to international investors. Several banks have reduced the amounts they are willing to lend to borrowers from outside Europe, whilst one major lender has restricted their products to EU citizens only.

Another area that French banks appear to be tightening up on is affordability and the ratio of lending to gross income. Traditionally French lenders will only allow a maximum of 33% of the gross income of the borrower to be set aside for loans such as mortgages. However, lenders have started to change the goal-posts, refusing borrowers who they feel do not have sufficient funds to live on even though they meet the 33% gross income requirement.

In addition, French banks have started adopting Basle III criteria, a new global regulatory standard on bank capital adequacy and liquidity, which stipulates that total outstanding loans should be no more than six times the borrowerâ€™s income. Serial investors with large buy-to-let portfolios and first time buyers, in particular, are the most vulnerable to the changes, as lenders appetite for risk recedes.

Rates have been flat over the past month with only a small increase to the Euribor and small drom in the Tec 10 for long term rates. We expact rates to remain flatish for the next month or so.
Avril 2011

How is the ECB rate rise affecting the French mortgage market?

True to form, the European Central Bank raised the main interest rate to 1.25% from 1% after two years without change – ECB president Jean-Claude Trichet forewarning us with the code words "strong vigilance" in the report of their monthly meeting. The ostensible reason for the increase in the base rate is to ward off inflation which stood at 2.70% on the day of the announcement. As in many countries around the world, the target for the Central Bank is a 2% inflation rate, which the ECB felt was too high to avoid acting on despite the debt related financial problems besetting many of the Eurozone members. It should not be forgotten that given the ECB's position of presiding over monetary policy of a diverse set of economies, it must be seen to act with authority, conviction and clarity.

We have not seen much change in the rates on offer for mortgages in France since the announcement of the increase. Markets and banks had in fact already priced in this increase – the wily foxes. We have seen an average increase of about 0.20% in the cost of variable rate mortgages, with some banks opting to further increase their margins. Fixed rates have seen smaller increases but remain on the upward trend as concerns over the viability of some Eurozone economies have an effect on longer term bonds and interest rates.

We should expect further increases to the lowest rates on offer and a flatter market overall as it becomes more expensive for banks to refinance and maintain market beating rates. Although the ECB has indicated this rise in interest rates does not necessarily denote a series of increases, we can be sure that if inflation doesn't recede over the next quarter, Jean Claude may start to feel strongly vigilant again.
March 2011:

Markets anticipate ECB rate rise in April

The European Central Bank (ECB) maintained its main refinancing rate at 1% last month despite indications that French inflation will be hitting 2.40% in 2011. The main base rate has been at this level since May 2009 and there is now increasing pressure on the ever-willing-to-be-hawkish ECB to raise rates. Initially inflation was forecast to be 1.8% this year and 1.5% in 2012. However, new ECB forecasts now predict an inflation rate of 2.40% for 2011, dropping back to 1.70% in 2012. The ECB has now used the words "strong vigilance" to describe their stance, which is generally seen as code for an interest rate rise the following month.

Generally, the philosophy of the ECB is to be extremely clear in its communication, with a potential rate rise in April openly discussed, leading the markets to react. Those with variable rate mortgages in France can relax a bit as, according to the ECB President Jean-Claude Trichet, any rate rise in April would certainly not mean the start of a series of hikes. Merely talking about the rate rise has already added approximately 0.15% onto the 3 month Euribor, the index which is use to price the majority of French variable rate mortgages, and which now stands at 1.20%. This increase will be directly impacting thousands of people's mortgage payments and the currency exchange rate, which has its own dampening effect on the economy and the property market. A French property network in France has reported a 3% drop in the number of sales for the past year, with a 13% fall in the number of sales in Paris where prices per square metre have reached an historic level. Whilst prices are falling in many areas of France, most notably -7% in Alsace -6% in Aquitaine, -6,% in the Midi-Pyrénées, Basse-Normandie and -5.5% in Brittany, there are still many stable areas with the overall market up 2.70% for the first quarter of the year.

So will they or won't they? The markets are pricing it in, but I personally think the ECB might not raise rates next month.Theeffectson the market of merely talking about a rate risecould be enough for now and the recovery is still fragile in many parts of Europe. See you next month to see ifmy prediction is correct.
February 2011:

French interest rates still rising

Over the last month banks have seen increases of 0.40% in the OAT, one of the main indices in France, which has led to further increases in the cost of fixed rate and capped rate mortgages. The French OAT index, which is based on the total obligations of the French treasury for bond issues over different durations, forms the basis for much of the long term lending at either capped or fixed rates of interest. This rise has been fully passed on to borrowers by the majority of banks now with some going further and increasing rates over and above this rise. Many banks have also taken this opportunity to slightly increase margins and initial rates on variable products even though the 3 month Euribor has been stable for the last month at just over 1%.

It still remains unclear as to the exact timing of further increases to the ECB base rate which continues to remain steady at 1%, though we may continue to see increases to fixed rates if the expectation of further inflation and rate rises from the ECB become apparent for the medium term. Should the spectre of a double dip recession raise its head again or if a continuous stream of unhelpful economic events casts doubts on the recovery, we may see long term interest rates begin to fall again. On the other hand if we continue to see a lack of liquidity in the market coupled with concerns over risk profiles and inflation we may find that rates will continue to rise.

In effect it is increasingly difficult to judge which direction interest rates will move in the short term unless you have a crystal ball as there are now so many factors at play. For this reason, we recommend that our clients still consider our capped and fixed rates. In spite of any recent rises, these product types offer long term peace of mind which has a premium all of its own.
January 2011:

French mortgage interest rate rises point to returning growth

Just a few short months ago in September 2010, French interest rates hit historic lows not seen in over 50 years. Fast forward to today and the situation has altered with the trend now for higher rates. We have seen strong rises in the 3-month Euribor recently, which has added almost half a percent in the past six months or so. Variable rates now start from 2.80% for a 25-year variable mortgage at 80% loan-to-value. Fixed rates have also increased by almost twice that amount and could be set to rise further. Mortgages for 80% of the purchase price can be found for 4.25% fixed for the entire 25-year duration of the loan. Great value can be found for 100% mortgages with a 30-year mortgage, which starts at 3.80% and cannot increase past 4.80% for the life of the mortgage. While it is unclear whether the European Central Bank will raise rates, there is increasing confidence in the return of growth and inflation in the medium-term which is pushing up the price of long-term bonds and fixed interest rates.

The recent rises probably show a return to more sensible interest rates and, although the trend is upwards, it remains to be seen how the austerity measures across Europe will bite, hindering inflation and growth. The UK outlook is for low growth as our housing market is still unaffordable for many, compounded by a lack of lending from the UK banks. The recent contraction in the economic growth "due to snow" shows just how fragile the recovery is. In Europe, the increasing deficit problems and lack of investor confidence in Portugal, Greece, Ireland and Spain has been a worry for many. The ECB and China have been buying bonds from these countries and managing well to reduce the amount of money the 'PIGS' have to pay to borrow on the international market for their spending plans. For the time being, mortgages are still available at 90% and 100% in France, a boon to many British buyers looking to take advantage of rising French property prices.
November 2010

Outlook good for 2011

The Euribor 3 month, which is the index used to price billions of Euros of variable interest rate non-resident mortgages, has risen 30% in the last 6 months and now stands at 1.030%, just above and in the normal pre-crisis range of the benchmark European Central bank rate of 1%.

The Tec 10 index, which is used to price the majority of French fixed rate loans, has risen 20% to 3.12% since the end of August, perhaps heralding the beginning of the end of these historically low interest rates.

The general outlook for rates on French mortgages looks good for 2011 especially in Q1. You can still get a 25-year fixed rate at 3.8% or 3.5% over 15 years at 80% of the purchase price, which in UK terms is still phenomenal. Tracker mortgages on the 3 month Euribor for an 80% mortgage start at 2.35% on a 25-year term. At 100% LTV you can get a rate of 3.10% which can never increase past 5.10% over a 25-year period.

However you look at it, the opportunity – given the current set buying conditions in France for UK purchasers – cannot be underestimated.
October 2010:

French rates at lowest level since WWII

October saw average French rates fall to their lowest level since the Second World War. The average rate now stands at 3.30%, down from 3.40% the previous month. One of the reasons rates are now so low is that the interest rate on long term government debt is at its lowest level for 200 years. As the French market has fixed rates for the term of the mortgage as well as a wide range of capped products, you can limit your exposure to future rate rises and lock in long term value. Quite simply, the cost of borrowing money in France has never been this cheap or secure for such a large number of people before. The euro may be strong now, but the fact that you can access near 100% funding means that it does not matter what the exchange rate is. The long term value of low rates, combined with low property prices, far outweighs any currency considerations. You can always buy Euros when the timing is right and your home currency is strong against the Euro.You can't always buy property near the bottom of the market with historically ultra low interest rates. We have been warned that some banks will start raising their fixed rates in early November by up to 0.2% so now is the time to try to secure an ultra low rate.

To see the graphs on this topic, please view a presentation here.
September 2010:

September saw fixed rate mortgages fall to their lowest ever level, as predicted in last month's French mortgage watch. The TEC 10 fell to 2.54% on the first of September and rose from there through the month to 2.85% dropping back to 2.66% by the end of the month. We are not currently seeing rises in the rates but October may bring small increases to some lenders fixed rates. There is still some regional variation in the fixed rate mortgage market with banks in Bordeaux, Limousin, Poitou, Charentes and the Midi Pyrenees all offering lower rates than for other regions.

On the variable side of things, there still seems no sign of a hike in the base rate which would bring changes to the 3 month Euribor rate against which the majority of variable lending is pegged. The 3 month Euribor is up to 0.88% from .65% in May largely due to the perceived increase in risk by banks lending to each other. If you are thinking of buying in Alps and have a 20% deposit, you could go for a variable mortgage based on the CHF Swiss Libor rates which would bring you in a variable rate of just 0.80% including the bank margin!
August 2010

Why is the TEC10 so low?

If tracker mortgages were the flavour of last month then fixed rates will be all the rage in September. Rates for fixed rate French mortgages have fallen significantly in the past year but the recent dramatic drop in the TEC 10 index (explained below) indicates that we should have the lowest fixed rates ever to be offered in France next month. The last time average fixed rates in France were below 3.50% was back in Q4 2005 when the TEC 10 was above 3%. With the TEC 10 now as low as 2.60%, a fall of around 40% in August alone, this could herald fixed rates at levels unseen in decades.

In an environment where French property prices are now stable but with sellers likely to be tempted by fair offers, now really does seem like a unique opportunity to buy a French property, especially with the security that a fixed rate mortgage brings.

The TEC10 is an index used by French banks to set their fixed rates. It is the daily long-term Government bond index, corresponding to the yield-to-maturity of a fictitious 10-year Treasury note. Banks borrow money from the markets based on this index and then provide loans to the borrowers plus the appropriate margin. The TEC 10 rate currently stands at 2.60% which is a historic low. So, what has caused the TEC 10 to fall this low?

The first reason is the outlook for inflation. The markets are predicting sluggish growth over the next five years and perhaps beyond. This means that when the markets look at the price of a 10-year bond, they can set the rates lower if the outlook for inflation is lower. Conversely, in a bull market with high levels of inflation, the rate will have to be higher because otherwise the net yield, once you deduct inflation, would be extremely low and nobody would buy the bonds - consequently the price has to rise.

Which brings us to the second reason. Many investors are seeking safe havens for their money, which means things like 10 year government bonds, corporate bonds from banks, institutional bonds which are all based on the TEC10. As we all know, with supply and demand, when there is a lot of something, the price becomes cheap-and there are a lot of people wanting to buy bonds and the aim of the game is to sell them as cheaply as possible
July 2010

Increased diligence and delays

Data out this month suggests that the excellent French property buying conditions will continue well into 2011 and perhaps the next increases in rates will only come in 2014. Tracker mortgages now seem to be the flavour of the month after comments by the ITEM club (Independent Treasury Economic Model) and Jean Claude Trichet, the president of the European central bank, have led to analysts predicting that rate rises seem a way off yet.

Lending for house purchases as a whole was up 3.4% across the Eurozone in June with France doing particularly well according to European Central bank data. The latest report from the FNAIM for June also confirms this for France as French property prices continue to remain stable with an increase of 0.6% in the last 3 months. French banks continue to lend at high levels of loan to value, up to 100% of the purchase price for a second home with some banks also including the purchase taxes in the loan for some property types.

French banks are keen to make the most of the historic interest rates, 1.75% for a 90% LTV tracker is the best we have seen for a second home purchase, but they are also cautious given the unusual economic conditions. What does this mean for your French mortgage application? Increased amounts of explanation required by the French bank and extra paper work required making for a longer application process. The high volume of clients now being scrutinised to a new level means that many banks are struggling to maintain their service levels. Add in the summer vacation season and we have a recipe for frustration, especially for those seeking a loan quickly.

If you are in a hurry to obtain a loan then make sure you gather all of the documentation together quickly and accurately and perhaps write a summary letter outlining your financial situation and how you manage your bank accounts. This will help your broker to quickly get up t speed with the best offers, perhaps running your situation passed a few banks to see which ones can make an offer in the shortest time. Mortgage offers can still be obtained quickly but extra diligence is required pre application to ensure that the application can go through smoothly. A good French mortgage broker is vital to getting the application quickly through the new checks.
June 2010

French Mortgage market trends: Banks tightening policy

The market for French mortgages is in good health as we pass the half way mark for the year. Most currencies have strengthened against the Euro meaning it is cheaper to make deposits on properties and the net cost of mortgage payments is also less. The pound is at a 19 month high against the Euro, in case you hadn't noticed… The horizon for rate increases still seems a way off and mortgage rates remain at their historic lows. So for the meantime the buying conditions in France are improving overall.
On the flip side, this month we have noticed a tightening of bank policy towards accepting clients for French mortgages and some leaseback companies. Attitudes amongst many of the banks have now changed at there is more caution in the air. Now more than ever it is important to check your situation out with us before moving ahead to ascertain that there is margin in your application to ensure your loan is approved.

As we all know the past 18 months have been uncertain times in which the economy has slowed considerably. This has meant a reduction in gross profit for many self-employed borrower of the period 08/09. The reduction when taken in context with other years of business may seem reasonable given the economic context. However, we have seen several borderline applications refused due to “significant reduction in net revenues” over the past month. This indicates a returning level of conservatism on the part of the French banks which saw it almost impossible for self-employed borrowers to find loans in France in the mid-nineties. For salaried borrowers, revenue will have remained constant over the period but borderline cases are harder now to pass through the bank’s lending committee.

It is definitely recommended for self-employed borrowers to run their applications passed one of our brokers in order to avoid being refused. Our brokers have experience of the current market context and find appropriate loans for self-employed borrowers and those seeking maximum loans every day.
May 2010

The end of interest only mortgages?

It's been a busy month so far in the world of French mortgages as buyers are back in the market looking to finalise deals after the lull during the Easter period. We have a seen a good pick up in the numbers of client enquiries, with a rise of over 20% on last month. The French banks have resisted increasing their rates, as the European Central Bank maintained its base rate at 1% for the 12th consecutive month. The likelihood of any rate rises in the foreseeable future seems remote owing to the troubles in Greece in spite of the 1 trillion bail out facility put in place by European finance ministers under the watchful eye of Chancellor Merkel and the animated figure of the French Prime Minister Sarkozy, who with a puffed out Gallic chest declared that if the deal was not agreed he would withdraw France from the Euro. So the Euro will remain weak in the short to medium term, with low interest rates to boot making buying conditions in France as good as they have ever been.

Much has been written recently about the end of the interest only mortgage, which has been the product of choice for people buying investment properties. In France we have seen the withdrawal recently of several products offering interest only periods. The fact of the matter is that interest only mortgages are only a relatively recent addition to the portfolio of mortgage products available in France, and the conditions for obtaining such a mortgage have always been relatively stringent.

For a pure interest only mortgage, borrowers have to have 120% of the amount they wish to borrow in equity, either in property, liquid stocks, tradable shares or bonds. The alternative would be to have a large deposit of 20% to 30%, or to place a side investment in cash with the lending bank of around 20%. Even in this case the bank may restrict the period where interest only is paid, tacking on a repayment period onto the end of the mortgage.

In order to qualify for this loan, the would-be borrower will have to show that the monthly payment for the repayment (capital and interest) is affordable. We have seen a large increase in the number of borrowers looking to switch from a repayment mortgage to interest only, perhaps trying to release equity. However, with the reduction in the number of banks offering such products, this sort of loan is only available to those borrowers with the best profiles.
April 2010

Cap and Collar mortgages, Fixed rates and Fixed payment mortgages

Over the course of the past month, more French banks have reduced their initial rates for non-resident mortgages in France. Although, the amounts are small, generally 0.1%-0.3%, these reductions do reveal increased competition in the market. The next point of competition will come when the overall spread, the amount of interest the bank adds to the loan as a margin, starts to fall again. These margins are approximately 35% higher than 5 years ago and should normally fall in line with increases in confidence and economic activity and rises in the European Central Bank rate.

In the medium term, I do not see the overall rates for new mortgages rising all that much, as there are still many structural problems in most European economies which make a return to growth and confidence still at least 12-18 months out. Any increase in the ECB rate should also see some accompanying reductions in the margins, keeping things quite stable in the medium term. In an interesting development today we can now offer a fixed rate interest only mortgage of 4.75% for 10 years, one for the investors.

As the general consensus is that rates will rise when the economy picks up, many of our clients are interested in mortgages which have a cap beyond which the rate cannot exceed. Rates are available from 3.75% on a +1%/-1% basis where the rate can increase by no more than 1% nor decrease by any more than 1%. Versions are also available at +2%/-2% and higher with the durations for these rates varying from 7 years up to 25 years. One thing to watch out for with cap and collar mortgages is the fact that the margin is only set on the day the mortgage is taken out.

Alternatives to the Cap and Collar mortgages are of course fixed rates starting at 4.10% for 25 years on a repayment basis and 4.75% for an interest only mortgage fixed for 10 years at high loan to values. In addition, the curious and popular ‘elastic duration’ French loans are available from 2.6% over 30 years. These ‘elastic’ loans with variable durations have a fixed monthly payment but the duration of the mortgage can extend by up to 5 years. Once the limit of 5 years is reached, your monthly payments can then start to increase, but by no more than French inflation per quarter or year depending on which Euribor index the loan is based on.
March 2010

Conflicting messages in the French mortgage market. Have we reached the bottom?

This month has seen some banks raising margins for non resident French mortgages, whilst others have lowered their rates, indicating some uncertainty in the short term. By comparison, in the resident market for mortgages in France, rates are still falling for both fixed and variable rate mortgages indicating competition for borrowers as the European central bank rate has not changed for many months. Stability is returning to the French housing market, with the average property prices up 0.6% in February, apartments up 1.4% and houses stable at -0.2% according to the FNAIM. What seems clear is that with any improvement in economic sentiment in the EU, French mortgage rates will begin to climb.

Changes to the rules for French life assurance

Many international buyers of French property are surprised to find that life assurance is compulsory for all French mortgages. Even more surprising is that the majority of French banks only allow applicants to use the life assurance recommended by the bank. However, this seems set to change with the Lagarde Reform which is currently going through the French legislative process. The main provision of this project lies in Article 17 which amends Article L. 312-9 of the Consumer Code as follows: "A lender may not refuse to secure another loan insurance contract when the contract has a level of security equivalent to the insurance contract that offers". Other amendments are also being proposed to strengthen consumer rights in this regard and the changes are expected to come into force on the 12th May 2010. This shake up should bring in more competition which is long overdue within the market with some insurance brokers saying that insurances costs may go down by over 50%. Typical insurance costs for a French mortgage are €30 per month per €100,000 borrowed.
February 2010

Athena Mortgages will keep you up to date

This is the first monthly newsletter from Athena mortgages which is in direct response to the number of people requesting to be added to our mailing list on our website. In this newsletter we will keep you up to date on the factors affecting the French mortgage market for international investors, as well as information on products and interesting case studies. We hope you find this synopsis of key information useful and if you have any requests for information you would like to see here on a regular basis, please let us know.

Rates move up due to EU economy fears

Average rates seem to be trending upwards as it seems less likely the ECB will raise the base rate. Banks are looking for other ways to boost their coffers, so are raising margins to enable them to offer higher interest rates. The news from the savage cuts to public spending required in Greece, Spain, Portugal, Ireland and the UK will mean lower inflation for the medium term. We have locked in some rates for offers published in the next 2 months but clients have to move quickly to provide complete applications to stand a chance of getting the rates and conditions.

January 2012

French Property Prices set for stable year

French property prices rose 2% in 2010 and a further 7% in 2011 after drops of approximately 3.5% and 5% in 2008 and 2009 respectively. This means that we essentially back to where we were in 2007 after 10 years of uninterrupted rises. The number of transactions reached record numbers in September 2011 with over 830,000 transactions recorded. This level of transactions was greatly supported by the historically low interest rates and government tax incentives to buy new build property. We will not see such support in 2012 as interest rates are now higher and many incentives have ended. Add to this the stricter criteria in evidence for obtaining credit many anticipate slowdown in the numbers of transaction, with some predicting falls of up to 5% if the economy continues to slow down. Given the extra strong performance in prime locations such as Paris and the PACA region should continue to grow.

Highlights 2011

Apartments across France rose 8.9%

Houses rose 6.20%

Paris apartments rose over 22%
November 2011

French house price chart by area
October 2011

Property market report

The increase in French property prices was muted in the third quarter of the year increasing by 0.6%* compared with the 4.3% increase experienced across regional areas of France in Q2. In Paris, prices were on the increase again with a rise of 3% in Q3, though the increase in the house prices was just 0.2%. Looking at France as a whole we saw an increase of 1% during the last three months which gives an increase of 7% for the year since Q3 2010. This constitutes +8.5% for apartments and 5.5% for houses.

The main reasons for the slowdown are the increases in rates earlier in the year which have fed through into the market and helped fuel economic uncertainty. This price stall may well be set to continue as many French people abandon projects for rental investments and second homes after increases in capital gains tax announced last month. Whilst rates have increased, they are still at relatively low levels. The capital gains tax changes are less of a concern to British and international investors as for the majority the overall net position has not changed much.

Further highlights for investors include some very strong growth in prices over the past 12 months; apartments and houses in the Champagne region have seen average rises of 10.5%, a return to growth in the Rhone-Alpes region of 3.5% and an increase of 12.6% in the popular PACA region which includes Provence, the Alps-and the Côte d'Azure. Good news for those seeking mortgages on ski property this winter.

At the prime and super prime end of the market the total sales were estimated at €131million for the last quarter, an increase of 67% versus Q2. Whilst the majority of buyers are French, international investors are making up an increasing proportion of the market as many seek secure value assets.

*Figures obtained from various sources including the FNAIM
September 2011

French Capital Gains tax update

The new law on French capital gains tax is set to come into force for properties sold after 1st of February 2012 after a new version of the law was ratified by the French National Assembly on the 7th of September and adopted by the Senate the following day. The tax will be levied on gains made on second homes or investment property with exception of the main residence.

Under the previous regime the taxable value of the property was reduced by 10% each year after five years of ownership resulting in no tax due after 15 years of ownership. Under the new rules it will still be possible to have a zero tax bill on the ownership of a second home in France, though now only after 30 years.

Although the law will not materially affect non resident owners in Briton and Europe owing to dual-taxation arrangements, the tax will be higher on residents of countries without such treaties. It is recommended if you have property in France, that you are thinking of selling, to sign a sales contract in November to have a chance of taking advantage of the old system (you may still be taxed under the new system if you sell your property to a company).

The details are as follows: First 5 years: no reduction Years 6 to 17: 2% per year Years 18 to 24:4% per year Years 25 to 30: 18% per year.

It will still be possible to deduct the acquisition costs and any renovation costs though generally this amount will be limited to 15% of the purchase price.

We may well see a glut of properties onto the market and some bargains around for those able to take advantage of the low interest rates currently on offer.
August 2011

New French Capital Gains Tax to encourage speculation

A new method of calculation of Capital Gains Tax announced by French Prime Minister, Francois Fillon last week, which may well give rise to an increase in transactions and property speculation by both French and non-resident buyers of French property.

Previously French the CGT rate applied to any capital gains made on French property would have reduced by 10% annually after the fifth year of ownership until there was effectively a zero rate applied in year 15. This 10% reduction after year five has now been scrapped in favor of an alternative calculation which instead allows sellers of French property to deduct the official amount of inflation during the period of ownership from any capital gain before the flat rate of tax is applied.

Example of Non French resident from the EU with a 19% rate
July 2011

A look back to 2010

French house prices increased by 141% from 1998 to 2010 according to the French National Institute of Statistics and Economic Studies. And 2010 saw the return to positive growth for the French property market after a rocky 2009.

The number of transactions by foreign buyers in France amounted to over 50,000 in 2010 versus almost 40,000 in 2009 – an increase of over 20%, which was also seen in the market for French property sold to French nationals. The average loan amount was up 10% to €210,000 based on an average transaction amount up 6% to €238,000, with approximately 30% of buyers taking a mortgage. The most popular areas were Paris with 35%, Province/Cote d'Azur with 13%, Rhône-Alps with 11% and the Languedoc Roussillon with 5%.

British buyers represented 11% of the market overall with close to 6,000 recorded transactions in 2010. The Brits are the number one overseas buyers in the Languedoc Roussillon, followed Aquitaine, Midi Pyrenees, then Normandy, Brittany, Poitou Charente and the Limousin. In terms of numbers of transactions, the highest level for British buyers could be found in Province/ Cote d'Azure, after the Italians. In Paris the numbers of recorded transactions by British buyers was limited to approximately 400.

Overall the profile of those buying in France has changed over the last few years and affluent buyers are now starting to come from emerging market economies. The sector has seen large increases in the numbers of Russian and Chinese buyers.
June 2011

Tips for beating rate rises and changing bank criteria

My top 5 tips for dealing with a dynamic rate and bank attitude environment such as this is to:
- Begin investigating mortgage options as early as possible in the buying process and get a decision in principle from a broker.
- Ensure you qualify for life assurance and find out if you will require a medical exam.
- Ensure all paperwork for the loan application is as complete as possible prior to signing a Compromise de Vente.
- Once you are ready to purchase send the completed file to an independent broker who is aware of the criteria and can place the application quickly with the right bank to match your profile.
- Sign and return all documents as quickly as possible to keep the momentum going as the longer the file is in process, the more likely criteria can change or rates increase.
May 2011

Tips for beating rate rises and changing bank criteria.

Helen, 47, an accountant from Kent, recently wrote to us having had a bad experience approaching a bank directly.

" The main reason for not going with that bank is our previous experience with them and also the experience of a friend of mine here in France. We both feel they ask more questions and require more information then is reasonable, they take a long time to reach a decision and then change the goal posts between offering a decision in principle and making the final offer"

Sadly this experience is not uncommon but it is where we can help. My top 5 tips for dealing with a dynamic rate and bank attitude environment such as this is to:

- Begin investigating mortgage options as early as possible in the buying process and get a decision in principle from a broker.
- Ensure you qualify for life assurance and find out if you will require a medical exam.
- Ensure all paperwork for the loan application is as complete as possible prior to signing a Compromise de vente.
- Once you are ready to purchase send the completed file to an independent broker who is aware of the criteria and can place the application quickly with the right bank to match your profile.
- Sign and return all documents as quickly as possible to keep the momentum going as the longer the file is in process, the more likely criteria can change or rates increase.
April 2011

Prices still on the upward climb... but for how long?

French property prices rose by more than 10% overall over the last year, with property price rises in Paris almost double that figure. According to a large estate agency in France, apartment prices increased by 0.25% in March – the fifth consecutive monthly increase – while house prices rose for the 17th month in a row, up almost 1% in the same period. The same agency also notes that the average difference between the published price and the actual sale price is approximately 5%, based on figures from more than 12,000 sales in March.

We will watch with interest for indications of how the market reacts to interest rate rises, as each increase reduces the amount of money that individuals can borrow. Added to the increase in rates is a rising trend for extra underwriting scrutiny by many lenders. Whereas in the past a single underwriter could give a decision on a file, now many banks are employing extra credit committees to double check each file using more stringent sets of underwriting criteria.

The challenge for us at Athena Mortgages is to stay up to date with and adapt to the evolving criteria we face from each of the top 50 lending institutions we can work with across France. Fortunately we have longstanding relationships with these institutions, which means we have the communication procedures in place to maintain good customer service. We are happy to try to help those who have been refused and also those who are applying direct as we are confident we can beat almost any rate – especially if the borrower has a 30% deposit
March 2011

Market review for UK buyers in France

Mortgage lending through UK lenders has dried up across the board over the past 12-24 months. This has inevitably had an impact on the ease with which British buyers can secure finance through UK banks to purchase property in France. The days when homeowners released equity from their properties to pay for that dream holiday home in Provence are now a distant memory.

A combination of falling house prices in the UK eroding the equity that homeowners have in their properties and the UK mortgage market drying up and leaving homeowners with very few remortgage options, has seen an increasing number of British buyers turning to a French mortgage as a means of financing a property purchase in France. Also, with the Pound currently weak against the Euro, buyers can take currency fluctuations out of the equation, and potentially save thousands of pounds on the purchase, by taking out a French mortgage and holding onto the property until Sterling rallies.

For those UK buyers who have 15-20% deposits, French mortgages are proving particularly popular as they can take advantage of some of the lowest mortgage rates in French history. Although historically French lenders have had much more stringent lending criteria thanUK banks, for those borrowers who can meet these criteria, there are some exceptionally attractive fixed and variable rates on the market. It is even possible to secure 100% mortgages if the borrower has savings that amount to 30% or more of the amount they want to borrow.

It's worth noting that borrowers will have to prove they can afford the repayments on the mortgage. French mortgages work on the basis that the total of all mortgages and loans held by the borrower do not exceed one-third of their income, which means that monthly repayments on a UK mortgage will be taken into consideration when trying to fund a property purchase in France.
February 2011

New build bounces back, opportunities for UK investors

In 2007 more than 125,000 new build units were sold in France marking the high point in property sales for that property class. The numbers almost halved the following year to 79,000. However recent figures suggest that the crisis in the sector may be over with just over 115,000 units sold in 2010.The future for the sector looks bright with many new developments coming online since the beginning of the year which will encourage many overseas and British investors looking to buy new build property in France.

British buyers have been in competition with French buyers who have had additional tax breaks offered by Sarkozy which has led to a scarcity of new build units in the Alps, Paris and other prime locations. Under the Loi Scellier, French tax payers can offset 25% of the property value against their income tax liability which has encouraged many high rate tax payers to buy. However, the amount which can be offset will be reduced to 20% for 2011 which should allow overseas investors more choice.

The ultra low interest rates combined with excellent tax breaks has created a buying frenzy in France which has meant that many investors from Britain had been missing out on the prime units, preferring to wait until something more suitable comes along. At times our clients have found there to be a lack of choice in some developments as French buyers have been snapping up the best available units immediately. However, this has changed since the beginning of the year according to many of our partners selling new build property. Large leaseback developers are reporting an increase of stock and choice not seen at the end of last year which in turn is leading to an increase in sales to British and overseas buyers who can now find the property they want.
January 2011

French property prices on the up

Prices for existing French property fell 3.1% in 2008 and 4.9% in 2009 but began to climb again in 2010, rising by 1.5%. If you compare the lowest point for French property prices in recent times, prices have increased 5.3% from the first quarter of 2009 to the end of 2010. To look at things another way, you could say that prices have remained flat for the past five years, making it an interesting time to find a bargain. One place where prices certainly have not remained flat is Paris, where prices rose by an average 4.4% over the same period.

The low interest rate environment has contributed to the recovery of French property prices, to a large extent reducing payments on existing mortgages and increasing the purchase power of borrowers as the cost of borrowing has come down. Transaction numbers increased 25% in 2010, rising to over 700,000 – just 100,000 below the peaks seen during the previous decade. Despite the recent increases in rates, the National Federation of French Es tate Agents (FNAIM) predicts growth in 2011 of between 3% and 6%, the higher figure based on interest rates not rising more than 1.5%. If interest rates did rise further than that we would see increases on the lower side. These predictions are for the whole of France so of course there will be regional variations. Average falls in the prices of apartments of more than 6% were registered in the medieval town of Troyes, a good performer in recent years, and also in Perpignan and Pau. Many areas on the Cote d'Azur saw rises of over 6% in the values of apartments for the year including Cannes and St Raphael, with Lyon and Marseille increasing by 5% and 4.5% respectively. Average increases in the prices of houses of between 3% and 9% we recorded in the Pas de Calais, Île de France (Paris) and PACA (Provence-Alpes-Côte d'Azur), making these regions the top three for 2010.

Source: FNAIM
November 2010

News round up

Paris property prices up 10.6%
Prices for Parisian 'pieds-a-terre' are strongly up on the same period last year according to a recent study. The average property price has for the first time broken the €7000 per square meter barrier. Transaction numbers are now at the average levels seen during the boom years of 1999 to 2007, having risen 23% since Q3 2009.

Hips for France?
A new law will come into force on Jan 1 2011 making it a requirement for all vendors to produce an energy "DPE" report on their property before putting the property on the market. This will mean a reduction in stock at the beginning of the year which should underpin current pricing levels overall but also act as a tool for negotiation for price reductions on older properties.
October 2010

Transaction numbers increasing

Recent figures show that the transaction numbers are increasing in France, providing a knock-on effect on French house prices. The number of transactions annually stood at around 800,000 or more for the five years preceding 2007, before sales numbers across France began to fall. The main reason for these falls was a combination of very high interest rates and inflation just prior to the financial crisis and the collapse of confidence thereafter. This continued until the middle of 2009, when annual transaction numbers stood at just over 550,000. It is no surprise that as mortgage finance became more affordable, and the end of the world didn't materialise, people were drawn back to the market, especially as in some cases buying was cheaper than renting. Since mid-2009, the number of completed house purchases in France has risen by around 100,000 per year. The figure now stands at just under 650,000 with the v-shaped recovery continuing. House prices have followed more or less exactly the same trend, with mid-2009 seeing prices start to rise again, and this upward trend has continued. While transaction levels remain below their peak, bargains and discounts will still be possible to find but these will become rarer as the market picks up again.

Click on this presentation to find graphs illustrating these figures.
September 2010

La Rentrée-Property market open for business

September marks the point at which France wakes up again after the annual slow down for their renowned annual vacations. France has been gearing up throughout September and we are now seeing a large increase in the number of completed transactions. The market for French property is certainly back in action with the number of leads received by Athenamortgages.com up 33% on last month.

The extent to which France is effectively shut for business during this time is not to be underestimated. One Notary we spoke to in the early summer effectively told us he would not be available for the next six weeks. This pattern is mirrored across France with many other government departs unreachable. At Athenamortgages.com, we always warn clients that getting mortgage offers in the summer months may take longer than expected as some banks are generally understaffed and unable to cope. With the French now fully rested and recuperated you can now expect your purchase in France to go through smoothly.
August 2010

If tracker mortgages were the flavour of last month then fixed rates will be all the rage in September. Rates for fixed rate French mortgages have fallen significantly in the past year but the recent dramatic drop in the TEC 10 index (explained below) indicates that we should have the lowest fixed rates ever to be offered in France next month. The last time average fixed rates in France were below 3.50% was back in Q4 2005 when the TEC 10 was above 3%. With the TEC 10 now as low as 2.60%, a fall of around 40% in August alone, this could herald fixed rates at levels unseen in decades.

In an environment where French property prices are now stable but with sellers likely to be tempted by fair offers, now really does seem like a unique opportunity to buy a French property, especially with the security that a fixed rate mortgage brings.
July 2010

New boost for luxury property market?

Last year France signed tax exchange of information agreements with a number of jurisdictions including Jersy, Guernsy the BVI and Cayman Islands. The draft French laws to bring them into effect have been passed by both houses of the French parliament and are now in force and will have effect for the purposes of France's 3% tax as of 1 January 2011.

Until now offshore trusts and companies based in the above tax havens had to pay a punitive 3% per annum on the gross market value of the properties which meant few such entities invested in France. This is now set to change as provided disclosure is made of the shareholders in such entities, no 3% tax will be levied.

According to French tax specialist David Anderson, "Investors are likely to seek asset classes not open to them in the UK such as ski chalets,vineyards and chateaux. The areas which are usually most attractive to foreign investors are the Cote d'Azur, Alps and Paris.
June 2010

104% mortgages on leasebacks?
This month discussions with our partner banks has shown up a new trend when it comes to financing French leaseback property. Some of our partners are now looking to create a list of leaseback builders and management companies that are considered to be the most secure. For these companies new loan conditions will be in place which will in fact see loan to values increasing to in some cases cover 100% of the purchase price of the property excluding VAT and 100% of the legal fees and taxes

This will be fantastic news for overseas investors looking to secure prime leaseback property from major developers.
May 2010

French property prices in the first quarter of 2010 appear to have risen significantly compared to the same quarter in 2009. The figure, estimated at 7% by the Fédération des promoteurs constructeurs (Federation of house builders) saw increases in the prices for new build property at 3.6% in Lyon, 8% in Paris, Ile-de-France and an impressive 11% in the city of Marseille. The average price for a one bedroom apartment stands at €168,858 and a 4 bedroom house at €512,412. Overall, compared with the first quarter of 2009, sales of new homes have increase by 18%, with the numbers of sales doubling in the urban areas of Paris, Lille, Toulouse and Lyon.

It is always important to check which Euribor rate as well as the margin added to your loan and to compare like for like as a loan with a lower margin might be based on the much higher 12 month Euribor.

The FNAIM (Federation of French Estate agents) also published is quarterly report in May painting a slightly different picture, though it does take into account the whole of the market, not just new build prices. The figures published this month show an overall drop in average French prices of 2% since the same period last year, 1.9% for apartments and 2.2% for houses. The Paris property market has returned to growth with a yearly increase on average of 2%, which mirrors the growth seen for the whole of France with an increase of 1.8% since last quarterly result were published.

January 2012

Euro update

The euro has generated seemingly endless heat and light in the last month but none of it has been translated into net motion. Against the pound and the US dollar it is essentially unchanged from its position on Christmas Day and New Year's Day. The euro's range against the dollar has covered four and a half cents during that time and two and a half against sterling.

Investors have proved surprisingly resilient in their support for the euro despite all it has thrown at them. Every time EU finance ministers gather, and following every summit meeting, the euro receives another burst of support. Apparently investors are desperate to believe that this meeting - the fifteenth, the umpteenth, it doesn't matter - will be the one that delivers the goods. They see not the least irony in the hope that each new agreement will succeed where its predecessors failed. At the moment the market is pinning its optimism for the euro on three developments: the European Central Bank's provision of unlimited, cheap three-year loans to the region's banks, the downturn in Italy's borrowing costs that this helped to provoke and the ongoing negotiations between the banks, the Athens government, the EU and the International Monetary Fund to reschedule Greek government debt.

As long as those carrots dangle before them, investors seem content not to rock the boat. After all, there really might be a rabbit in the Brussels hat and it would be a shame to walk away only to miss its triumphant presentation. Even those who don't believe in rabbits are reluctant to leave the show; as with Father Christmas, you can never be sure

So the euro totters along, always treading gingerly on the edge but never falling off. Having managed to keep up the act for this long there is no reason to bet it will tumble tomorrow.
November 2011

At the end of October investors were cock-a-hoop that EU leaders had agreed a rescue package that would provide Greece with a second lump of finance, recapitalise the region's banks and beef up the financial stability facility to a trillion euros. The euro climbed two cents higher against the pound and rose by three cents against the US dollar.

Less than a week later the wheels had come off after the Greek prime minister decided he could not sign up for the deal without a referendum. In the confusion that followed, the referendum idea was scrapped the premier stood down. Italy's PM left office only days later and both have been replaced by unelected "technocratic" economics professors. In mid-November there was a third change of government in Euroland when Spanish voters used a general election to sack the ruling party in favour of the opposition, hoping a change of austerity would be as good as a rest from it.

The euro ends the penultimate week of November three cents lower than a month ago against the dollar and a cent down on the pound. It could have been worse, given the low ebb of confidence in the single currency. However, investors are uncertain about the implications of a euro breakup because they have no idea whether, when or how it might happen. Would it make things worse than they already are? Or would the removal of weaker members - perhaps leaving a hard German-centric core - improve the situation?

Having taken two years to paint themselves into their current uncomfortable corner it is unlikely that EU leaders will rush to bring things to a head. There is no guarantee that we will be discussing this self-same uncertainty and lack of confidence in a month's time but experience points that way
October 2011

You would've had to have beenmarooned on a desert island, cut off from the outside world, not to have noticed that Euroland has had a debt crisis on its hands. It is difficult to comprehend how the crisis has managed to drag on for two long years, pretty much since the EU discovered that Greece had borrowed beyond its means. But it has. The solution from Brussels was to lend even more money to Athens and to hope the problem would go away. But it hasn't.

At the time of writing EU leaders are hammering out a grand unified plan that will oversee an orderly partial default by Greece. At the same time they will reveal the scope and structure of a beefed-up European Financial Stability Facility that will prevent other Eurozone governments – notably Italy and Spain – finding themselves unable to fund their debts. A broad reinforcement of banks' capital resources will also be part of the deal.

Let's consider what the plan could mean.

First, and essentially, it will mean losses for the holders of Greek government bonds. There is no point in lending more money to Greece when it cannot even cope with its existing borrowings. It will mean more government money for European banks and more disgruntled voters, especially in Germany. It will mean higher borrowing costs for Euroland governments in general, especially for France, which could well lose its AAA credit rating as a result of increased commitments to the EFSF pot.

As for the Euro itself, it is likely that the debt resolution will achieve little or nothing. There will still be nervousness about Italy and Spain and the Euroland economy will be held back by the diversion of cash to the various bailouts. Intriguingly, after all the fuss, the Euro, the Pound and the US Dollar are in identical positions today to those they occupied a year ago. There has been movement along the way but no net change. It is not impossible to imagine that the new EU plan will perpetuate that stability.
September 2011

In the last two months, sterling has predominately been stuck in a horizontal trend between €1.1250 and €1.550. However as the early days of September ticked by, the rate moved above €1.16 for the first time since early March, resulting in a 6 month high. The rate even briefly peaked above €1.17 on the 12 of September before falling sharply only a few days later.

So, once again we sit in the range above €1.12 and below €1.16 and Greece is back in the spot light. Merkel and Sarkozy did well to calm investors' nerves with comments stating they are convinced Greece will remain within the euro mechanism, but this confidence did not last long. A Greek default now looks inevitable as the mid October deadline for much needed funding draws ever closer and the chances of Greece meeting the conditions set out to receive the next instalment of the bailout package moves further away.

Greece said it was close to a deal with the Troika*, but that confidence seems very one-sided as the IMF, ECB and EC were so frustrated with Greek failures that they didn't even attend the meeting – instead opting for a conference call. The IMF has raised fears further by announcing that the global economy has entered, "a dangerous new phase" of slow growth in relation to the euro zone debt crisis.

With the ECB lowering growth and inflation forecasts, this suggests that the euro zone is suffering an economic slowdown and speculation is increasing that that the ECB will be forced to cut interest rates in the area during the final quarter of the year. This represents a quick turnaround following two interest rate rises since June and will do nothing to alleviate concerns that a single monetary policy across such a diverse range of economies doesn't work.

The problems in the euro zone continued when S&P fired a shot across the bow of Italy, downgrading the country one notch to A/A1 and blaming political infighting for an ineffective reaction to its financial problems. The bad news for Europe and its banks continued, with a report that Siemens recently withdrew more than €0.5 billion of cash deposits from an as-yet-unknown French bank, and transferred the funds to the ECB due to fears about the health of the bank.

As expected the Bank of England's Quarterly Bulletin suggested that the UK's QE policy was a considerable success, adding 1.5-2.0% to GDP (and up to 1.5% to CPI inflation). Whether correct or not, the market has interpreted this as part of a communiqué that more QE is on its way, which could be viewed as either GBP-negative or reassuring that the bank stands ready for action, depending on your side of the fence.

The direction of the sterling/euro will largely depend on how euro zone leaders and the International Monetary Fund deal with the debt crisis and whether the markets view it with optimism or scepticism.

*The Troika refers to the group consisting of the European Commission (EC), the European Central Bank (ECB) and the International Monetary Fund (IMF) that coordinated the financial bailouts of Greece, Ireland and Portugal.
August 2011

During the compilation of last month's edition of this column the euro traded at €1.1335 to the pound and at $1.4450. It has visited those exact same levels today. To take the comparisons a stage further, euro/dollar has crossed the $1.4450 line more than a dozen times since April and sterling/euro has passed through €1.1335, at a rough count, 16 times since March. As with a football match that goes to penalties after extra time, with the teams drawing 6-6, that does not mean nothing has been going on.

The southern European sovereign debt crisis continues to fester, although with three quarters of the continent's politicians and bankers on holiday it has been festering more slowly in August. The European Central Bank has been holding things together, buying Spanish and Italian government bonds to prop up the market, but that is no more than a short term tactic. Without a proper solution things will get nasty.

In Washington the bloody-mindedness of party politicians has cost America its triple-A credit rating, at least as far as Standard & Poor's is concerned. Having refused to agree on an increase to the debt ceiling they could well have condemned the country to spending cuts which will have an arbitrary impact on the rich and poor alike. Well, the poor, anyway.

Relatively, Britain is the saint in all of this. It has no credit or budget crisis. There is (albeit unenthusiastic) government harmony on the fiscal position. Economic growth in Q2 was at least equal to Germany and the euro zone. Together with an undisputed AAA credit rating it makes sterling a candidate for the world's top safe-haven currency at a time when one is needed the most.

But life is not that simple. Sterling's long record of boom-and-bust makes investors wary. So they don't like the euro, they don't like the dollar and they don't trust the pound. It is not impossible to imagine having this very same conversation in a month's time.
July 2011

The seemingly endless saga of Greece, Ireland, Portugal, debt and contagion is almost certain to run into a third year. Having initially assured investors that Greece was perfectly capable of supporting a huge and growing deficit, the EU admitted defeat last spring. The wealthy Euroland nations clubbed together to lend Greece even more money. This bailout, the EU insisted, would solve the problem once and for all. It gave the same assurance when it later had to rescue Ireland and Portugal on similar terms. Now, Greece needs to borrow yet more money and Portugal is waiting in the wings for a second handout. This July Eurozone leaders agreed on a new plan that will cover those three, together with any other country which might find difficulty in selling its government bonds to unwary investors (Italy? Spain?). This plan will solve the problem once and for all.

Not surprisingly, investors are sceptical. They have heard it all before. They are also now worried about a totally self-inflicted debt problem with which Washington has saddled itself. The Republican House of Representatives wants to cut public spending. The Democratic Senate and White House want to raise taxes. Withoutan agreement, there will be no sign-off for an increase in the "debt ceiling", which limits the total amount the government can borrow. Without an increase the government will run out of money. Almost whatever the outcome of the negotiations, global investors' trust in America and the dollar will have been damaged.

Britain's economy grew by just 0.2% in the nine months to June. Technically, it amounts to a recovery. Practically, the growth is so minimal that only a statistician would notice it. Interest rates will remain low for an indefinite period.

Three basket cases; three currencies that nobody really wants to buy. It is less a matter of picking a winner than of avoiding the biggest loser. Faites vos jeux!
June 2011

Most politicians and all national leaders in Euroland are adamant that the problem of Greece's overdraft will soon be sorted. At the same time it is easy to find sceptics among Anglo-Saxon ex-politicians on both sides of the Atlantic: They see no sense in postponing what they see as the inevitable default and argue that lending yet more money to a spendthrift is like plying an alcoholic with booze.

Investors are doing their best to keep an open mind. On one hand they would much rather see the EU rescue attempt work than have to live with the consequences if it didn't. On the other, they cannot help but fear what will happen when the EU handouts eventually stop. The uncertainty leads to frequent changes of sentiment towards the euro; the French president says it will all be alright and the euro goes up; an American investment bank says it will all end in tears and the euro goes down.

Sterling/euro has covered a range of six cents in the last six weeks with major changes of direction roughly once a week. Not all of those reversals have been down to the euro though. Sterling is still quite capable of shooting itself in the foot, as it did when the Bank of England's monetary policy committee started talking again about increasing the asset purchase programme - quantitative easing or printing money if you would prefer.

At least the Federal Reserve has put a nail in the coffin of its asset purchase scheme. It will end in June and is unlikely to be repeated in the foreseeable future. It will mean one less downward pressure on the dollar; it will not necessarily reduce the volatility of euro/dollar, which has covered a nine-cent range in the last six weeks with half a dozen reversals.

Interest rates in Britain and the States are likely to remain very low beyond the end of the year. Euro interest rates are likely to go up. That distinction will tend to work in the euro's favour but the advantage will be compromised by every new scare story about Greece.
May 2011

The elephant in the euro's living room is trumpeting loudly and will not be ignored. Whilst it would be exaggerating to say that a sovereign default by Greece is now only a matter of time, it would not be a gross overstatement. Athens is selling off state assets and applying further spending cuts to demonstrate compliance with the strictures attached to EU and IMF loans. Ports, airports, utilities, the national lottery, even some islands are on the block as the country struggles to turn capital assets into cash to pay the phone bill.

The Greek debt fiasco is the main reason why the euro has been receiving a bit of a beating. The secondary reason is that the European Central Bank may be taking a step back from the interest rate increases upon which investors had been pinning their hopes. After its May policy meeting the ECB signalled there would be no second upward move at least until July. The net result for the euro has been the loss of eight US cents and more than three sterling pennies in less than three weeks.

The main beneficiary of investors' misgivings about the euro has been the US dollar, not because investors are particularly enamoured of it but because it is the easiest and most liquid currency against which to sell the euro. In the background is a slight change of tone at the Federal Reserve. The Fed has revealed it is at last considering a strategy to "normalize" US interest rates; i.e. to take them higher. A move before the end of the year is possible, if not yet likely.

Sterling has taken advantage of the euro's discomfiture by keeping a low profile and doing nothing particularly wrong. UK interest rates are not going up any time soon but nor, apparently, are anyone else's. Although investors see no compelling reason to buy the pound, neither can they find any fresh reason to sell it.
April 2011

Euro interest rates are going up, while sterling and dollar interest rates are not. That distinction has set the tone for these three currencies over the last month.

Having promised in early March that it would act against an above-target rate of inflation – 2.7% at the last count compared to a target of 2% – the European Central Bank set the ball rolling in April by lifting its refinancing fate from 1% to 1.25%. Investors are in no doubt that further increases are in the pipeline.

Meanwhile, in London the Bank of England seems even less inclined to tighten monetary policy. At the beginning of the year investors pencilled in May 5 as the likely date for the bank rate to move North from the 0.5% position it has occupied since March 2009. That date has now been erased and replaced by November 10. Maybe. There are two reasons for the big change in sentiment. Firstly, UK inflation fell back in March from 4.4% to 4.0%. Secondly, the nine members of the monetary policy committee have fallen into a consistent pattern of voting six-three against a rate increase.

Across the Pond there is no suggestion whatsoever that higher US interest rates might be on the horizon. As in London, a vocal minority of the Federal Open Market Committee believes that perennially ultra-low rates simply store up trouble for the future, but the majority of voting members are fearful that to raise rates too quickly would prejudice America's economic recovery.

The net result has been a race to the bottom between the pound and the dollar as the euro strode ahead. The dollar is winning the contest, thanks to Standard & Poor's. The firm has attached a "negative" outlook to the United States' AAA credit rating. An unexpected improvement in UK retail sales provided the pound with a surprise bounce just before Easter but nobody is under any illusions that it signified a turnaround in sterling's fortunes.
March 2011

It was less of a downward drift for Sterling in March than an upward drift for the Euro but either could have been justified by the same logic: interest rates, as usual. More precisely, it was investors' perception of which would go up first, the Bank of England's Bank Rate (currently 0.5%) or the European Central Bank's Refinancing Rate (1.0%). After a period during which the greatest hope was fixed on Sterling, anticipation has now swung firmly towards the Euro.

Three members of the Bank of England's policy committee want to increase interest rates as a response to inflation, which has now hit 4.4%, well over twice the Bank's 2% target. But the six other members, including the governor, still believe it would be pointless. They say inflation will return naturally when the VAT increase drops out of the equation next January and oil prices fail to repeat the one-third rise they experienced over the last 12 months. From what he said in his Budget speech the Chancellor appears to be sympathetic to that argument, so there is not even any political pressure for a rate increase.

In Europe, on the other hand, the European Central Bank looks determined to respond to the inflation threat, even though at 2.2% it is only half as threatening as in Britain. The ECB president has as good as promised that Euro interest rates will go up in April – and when he says something like that the market is bound to sit up and take notice.

Euroland clearly has economic problems of its own, the biggest being what to do about Portugal now the parliament there has thrown out a bill to balance the budget and manage the country's debt. It has become inevitable that Portugal will follow Greece and Ireland into EU-administered receivership and Spain might not be far behind. But for now it is interest rates upon which investors focus and the Euro is out there in the lead.
February 2011

It was another zero-sum game for sterling in February. A three-cent rally in the first half of the month gave way to a three-cent retreat that left the pound unchanged in late February from its position at the beginning of the month. Almost the whole exercise was driven by interest rates. Not actual changes in interest rates but in the market's expectations of where they might go. The revolutions in North Africa and the Middle East made an unwelcome contribution to the proceedings.

Initially everything revolved around the prospect of a sterling interest rate increase. Investors fancied that the Bank of England could not stand idly by with UK inflation running at double its 2% target level. The Monetary Policy Committee must surely act to increase the Bank Rate? Mustn't it?

From sterling's point of view the game changed dramatically in late January with the publication of figures for UK gross domestic product (GDP). After growth of 0.3%, 1.1% and 0.7% in the first three quarters of 2010 the expectation was that the economy would have expanded by 0.4% in the fourth quarter. Investors were therefore shocked when instead of achieving modest growth the UK economy turned out to have shrunk by -0.5%. Sterling took a tumble from which it could take months to recover.

That argument kept sterling aloft until the European Central Bank made its presence felt. Three of its top people, on successive days, made the unnecessary comment that the ECB would increase euro interest rates if inflation were to become a problem. On the face of it the statements had no news value: everyone knows that is what the ECB does. So they must have been hinting at something. The ECB is worried that soaring oil prices will push Euroland inflation (2.4% at the last take) beyond the comfort point. Such a development would be anathema to the ECB so it is going to raise interest rates sooner than previously expected. That, anyway, was how investors saw the situation.

So sterling went up and then it went down. There could be more of that in coming weeks as Portugal follows Greece and Ireland down the road to receivership or the Bank of England surprises everyone with a March rate increase. Rely on uncertainty and hedge half of your euro exposure at a fixed price.
January 2011

After a torrid time at the turn of the year the euro began to regain its equilibrium after twelfth night. The market's change of heart was the result of an improvement in the outlook for Portugal, Spain and the other fiscally ailing peripheral states. Until January, investors had been unable to see beyond the risk of default posed by these countries. Nobody wanted to buy their government bonds. Well, not at any rate of interest that Portugal would be able to afford in the long run anyway. China was first to offer assistance, pledging to spend a portion of its huge pot of money on Portuguese and other government bonds. Later, Japan announced it would purchase a substantial part of a multi-government bond issue that Brussels would use to fund its bailout of Ireland.

The effect of the Chinese and Japanese intervention was twofold. First, it helped restore faith in the unpopular government bonds and made the need for future bailouts less urgent. Second, it implied a diversion of investment towards euro and away from America. It leaves Portugal still paying a hefty interest rate premium for its borrowings but the Lisbon government is paying less than the 7% that it described previously as intolerable. The net effect for the euro/dollar has been a protracted rally that has lifted it eight cents - more than six per cent - above its new year lows.

From sterling's point of view the game changed dramatically in late January with the publication of figures for UK gross domestic product (GDP). After growth of 0.3%, 1.1% and 0.7% in the first three quarters of 2010 the expectation was that the economy would have expanded by 0.4% in the fourth quarter. Investors were therefore shocked when instead of achieving modest growth the UK economy turned out to have shrunk by -0.5%. Sterling took a tumble from which it could take months to recover.

The performance of the euro from here on in will depend on how effective the Chinese and Japanese buying is at persuading other investors to join them in buying potentially troubled euro zone government debt. For the dollar, the only real prospect of strengthening against the euro is if the Euroland government debt market suffers a relapse. That is not impossible to imagine but it is impossible to predict. As for the once-proud pound, it will have to endure weeks or months of introspection about the renewed risk of a second recessionary dip. Life will not be easy for sterling.

Those with regular euro payments to make should consider fixing an exchange rate for at least half their needs in the coming year with a monthly payment plan. The euro is not guaranteed to strengthen further against the pound and the dollar but it would be rash to bank on it weakening.
November 2010

For what seemed like half a year investors hated the US dollar. They hated the slowdown in US growth, they hated the advent of a second round of quantitative easing ("printing money" as the naysayers describe it) and they had little interest in the benefits of a safe-haven currency as long as China, Germany, Brazil, Australia and the rest of them were reporting economic progress. Once the problems of Greece's fiscal deficit had been sorted out by a fusillade of EU and International Monetary Fund cash, back in May, they loved the euro.

That picture has now been reversed. It is impractical for investors to hate the world's two biggest currencies at the same time; where else would they put their money? So they have fallen back in love with the dollar because they don't like the euro. They don't like the way the peripheral states are falling like ninepins to the curse of fiscal improbity. Greece has had to be rescued from bankruptcy and Ireland is following the same path. Lined up in Ireland's wake are Portugal (almost certainly) and Spain, which would be a much bigger headache for the EU stability fund. The worst case would be if Belgium and Italy were to end up in the same boat.

Compared to its cross-Channel (and Irish Sea) neighbours, Britain is doing relatively well. Four successive quarters of growth have added 2.8% to the size of the UK economy and the number of job-seekers actually fell in October, contrary to predictions. It is unlikely that progress will continue at that level but the prospect of a second recessionary dip now looks faint. Unless and until Euroland can get its budgetary act together it is likely that the dollar will lead the way, followed by the pound and trailed in a distant third place by the euro. Of course, miracles can happen....
October 2010

The Euro has made the most of its good fortune. Over the course of six weeks it added 10% against the US dollar and 9% against the pound. Its success against the dollar was mainly due to investors dislike of the USD. A knock-on effect of all the activity in EUR/USD trading, has been that Sterling has been left behind.

Nervousness has dogged Sterling throughout October and there could be more problems on the horizon. Firstly, the Government's "austerity" policy may well tip Britain's economy back into recession, and secondly, the Bank of England could well decide to run another round of quantitative easing that would dilute the currency's value. Either one would disadvantage the pound, while the two together would be a real problem.

However, there was a little cause for optimism, with the release of Britain's figures for economic growth in the third quarter. Maybe, things aren't as bad as everyone thought. The numbers are far more positive than even the staunchest optimists had expected. Growth of 1.2% in the second quarter and 0.8% in Q3, have set Britain up for a financial year well ahead of the government's estimates.

Sterling is not off the hook though. There will be two revisions to the third quarter growth figures and both could be detrimental to Sterling. Half a million public sector redundancies might destroy consumer confidence and plunge the economy back into recession. On the other hand, the UK economy has performed appreciably better in the last nine months than most analysts predicted.

The Euro has lived a charmed life during the last two months. At some point its luck could well run out.
September 2010

The euro has been doing well despite some dodgy Euroland statistics. Granted, Germany's economy grew by +2.2% in the second quarter, way ahead of anything else in the region (Britain +1.2%) but the euro zone as a whole only managed +1.0%; not the stuff of legend.

Consequently, sterling has suffered against the euro - to the tune of five cents - even as it rose by three against the dollar. There are several worries; renewed quantitative easing that could undermine confidence in the currency, falling house prices and high government borrowing. The biggest concern, however, is that government spending cuts will tip the economy back into recession.

Fortunately for the pound, the International Monetary Fund (IMF) disagrees. Its recent report says the recovery is "under way". It believes government policy is "appropriately ambitious" and that "fiscal tightening will dampen short-term growth but not stop it as other sectors of the economy emerge as drivers of recovery."

Currency sentiment has been particularly fickle this year. Investors' love/hate relationship with the euro and the dollar flips on an almost monthly basis and sterling either dodges or suffers the collateral damage. That situation is not about to change but, trades unions permitting, the UK economy seems to be no more under threat than its G7 peer group.
August 2010

The euro survived the stress-testing of EU banks, 'proving' they could survive all that Mammon might throw at them. Despite complaints that the stresses applied to the banks' balance sheets were no more stressful than a Chinese burn, that issue is officially dead. What the euro cannot dismiss so easily is investors' ongoing fretfulness about Greece, Club Med and the EU's security blanket. Slovakia has refused to pay. Spain wants a time-out on its austerity regimen. Ireland's credit downgrade means it is paying more to borrow money than Greece, whose borrowing it must subsidise through the EU safety net. All is not sweetness and light for the euro.

Since its announcement two months ago Britain's Austerity Budget has convinced not just the opposition Labour Party but the world at large that government spending cuts will condemn the economy to a decade (a century?) of decline. They are guessing, of course, but that does not make investors any more well-disposed to the pound. It is not just Sun readers who love a disaster; investors are equally as ghoulish.

August was a messy month for currencies, as it often is. At the best of times investors cannot know what will happen next. As we move into September that uncertainty is at a twelve-month high.

March 2010

Buy of the month Purchase of a classic French <<Maison de caractère>>.

Emily, from London, fell in love with a presbytery renovation project in the middle of France in an area she knows well with a purchase price of €85,000.

Emily chose a 25 year fixed rate at 4.35% through Athena Mortgages for this her first ever purchase, putting down €25,000 to cover deposit of €17,000, purchase taxes of €6,400 and fees of €1,600.

Her monthly payments for the mortgage €69,840 are €388 with life assurance payments of €17.

Long term fixed rates like this are common in France. It is important to note that there are always early repayment penalties for fixed rates which are usually half the interest rate on any sum you pay off early.
February 2010

Capped payment mortgages for investors

Since the beginning of the year we have had a large volume of investors buying leaseback properties all over France. Whilst interest only products for these sorts of purchases have been popular in the past, many investors are now choosing repayment products for their leaseback properties as current rates are so low.

One of the attractions of taking out a French repayment mortgage is that the monthly payments on these mortgages are usually capped in some way, giving security. Whilst 25 year fixed rates are available at about 4.5%, variable rates are 2.4% for this duration, making the headline numbers for investments with 4% yield look very manageable.

For example one of our partners has a leaseback with a household name management company where a 5% deposit will get you a property of €300,000 on a repayment basis over 30 years with a monthly payment after rental income is taken into consideration of less that €100 per month. This payment will remain more or less fixed as both the rental income and the monthly payment increase by the rate of inflation.

If you put your deposit and €100 into a savings account you would need an average rate of return in excess of 10% per year to get close to the a rate of growth in the value of the property at 2.5%. Interesting eh?

September 2010

Chic at the price: From apartments on the seafront to glamorous ... French mortgage specialist athenamortgages.com has seen a sharp rise in.... Part of the Daily Mail,

>>Read more
August 2010

A Place in the Sun | Feature - Low French fixed rate mortgages
The French mortgage specialist also expects rates to fall further in September. John Busby, director, Athena Mortgages, comments: “France is ... >>Read more
Profit from French property | Moneywise
The French mortgage specialist also expects rates to fall further in September. John Busby, director, Athena Mortgages, comments: “France is ... >>Read more
July 2010

French property loans tightening for self employed but banks boost ...
French banks make it harder for self-employed borrowers to find a loan in France >>Read more
BuyAssociation - French mortgage market tightens
Leading French loan broker Athena Mortgages said that attitudes amongst many of the ... in net revenues over the past month,' explained director John Busby. ... >>Read more
June 2010

Property Investment News - EveryInvestor.co.uk: Juis avez une ...
Coverage of the buoyant conditions experienced by Athenamortgages.com >>Read more
BuyAssociation - French mortgage market tightens
Leading French loan broker Athena Mortgages said that attitudes amongst many of the ... in net revenues over the past month,' explained director John Busby. ... >>Read more
March 2010

Leaseback property in France: Is now the time to buy? | This is Money
John Busby commenting on the current French leaseback market. >>Read more
A place to Parc: A healthy investment and a holiday makes Centre ...
The Daily mail covers the finance options for investing in a Center Parcs cottage.
February 2010

Where would you invest a spare £100000? - Times Online
John Busby, Athena, the French mortgage specialist Busby would split his fantasy £100000 ... taking out 30-year repayment mortgages at 2.7%. ... >>Read more
Octobre 2009

BBC News - Tougher scrutiny for home loans
French mortgage perspective on mooted changes to the affordability calculations by banks in the UK. ... >>Read more
August 2009

Property news: Prices remain steady in France | News | Houses for ...
Short article in country life relating to French property prices. ... >>Read more