Category: Blog

For US-based investors and expatriates, the USD/EUR exchange rate in 2026 will be a quiet but powerful driver of French property value and financing strategy. Currency moves can amplify returns or erode them, depending on how you structure your purchase and how you finance your acquisition.

In this article, we outline the key USD/EUR dynamics for 2026, what they mean for the attractiveness of French real estate to US residents, and how borrowing in euros can mitigate exchange-rate risk over the life of the investment.

• Why the USD/EUR rate is a decisive factor for US-based buyers
• How 2026 macro trends may influence the currency pair
• How euro-denominated borrowing naturally hedges your exposure
• Practical structuring ideas for HNW and ultra-HNW clients

This article draws on current French mortgage market conditions for 2025, including the continued attractiveness of local euro financing for non-resident, international buyers, where we see long-term fixed rates and structurally conservative lending practices that remain very competitive versus US funding costs.

1. USD/EUR: Why It Matters So Much for US-Based Buyers

When a US investor buys French property, three currency dimensions are in play:

• Entry cost: The dollar cost of the purchase price in euros at the time of acquisition.
• Ongoing cash flows: Rental income, running costs, and mortgage payments, typically in euros.
• Exit value: The dollar value of the eventual sale proceeds, which depends on both the euro property price and the USD/EUR rate at exit.

A stronger dollar (lower EUR/USD) makes the initial purchase cheaper in dollar terms, but reduces the dollar value of euro rental income and any future resale proceeds. A weaker dollar (higher EUR/USD) makes the entry more expensive, but enhances the dollar value of all future euro cash flows and the exit price.

2. 2026 Outlook: A “Two-Speed” Story for US Investors

Heading into 2026, most central bank and macro research houses focus on three themes:

• Converging interest rates: The gap between US and eurozone policy rates is expected to narrow gradually as the Federal Reserve normalizes from previous tightening cycles and the European Central Bank manages inflation closer to target.
• Moderating US growth: After several years of relatively strong US performance, consensus expectations point to slower, more trend-like growth, which historically reduces the scope for prolonged dollar strength.
• Residual volatility: Geopolitics, elections, and divergent fiscal positions in both the US and eurozone are likely to result in episodes of heightened volatility, even if the medium-term range for USD/EUR remains bounded rather than trending aggressively.

In practical terms, many institutional and private-bank forecasts cluster around a broad trading range rather than an extreme directional call for 2026. That implies:

• The scope for a dramatic structural move in USD/EUR may be lower than in previous shock years.
• But short- to medium-term swings of 5–10% remain highly plausible, and that range is material when dealing with multi-million-euro assets.

For high-net-worth buyers, the message is not to attempt to “trade the currency” but to treat EUR exposure as an asset-allocation decision and manage it explicitly.

3. How Exchange Rates Affect the Attractiveness of French Property

French prime and secondary markets continue to look attractive in 2025–2026 relative to many other developed markets, supported by:

• Competitive euro mortgage rates for non-residents, with 15–20+ year fixed rates that remain materially below typical US 30-year mortgage rates and often below yields on US high-yield cash and short-duration fixed income.
• Conservative lending standards (loan-to-income caps, equity requirements) that have historically dampened speculative excess and provided relative price stability.
• Tax-planning benefits for HNW clients, including French wealth tax (IFI) optimisation by holding leverage against high-value property, thereby reducing taxable real-estate equity.

In that context, USD/EUR can tip the balance in either direction:

• If the dollar is strong, US buyers effectively receive a “discount” on euro property values; the same dollar budget buys more square meters, particularly in secondary but high-quality regions.
• If the dollar is weak, the property looks more expensive initially in dollar terms, but the prospective euro income and capital gains translate back into more dollars over time, enhancing long-term total return.

The question becomes how to reduce the risk that an adverse shift in USD/EUR undermines the investment thesis—particularly for those relying on US-dollar liquidity and income streams.

4. Why Borrowing in Euros Is a Natural Hedge

For US-based buyers, one of the most powerful risk-management tools is to finance in the same currency as the underlying asset—in this case, euros. This alignment creates several important effects:

• Asset–liability matching: Both the property and the mortgage are denominated in euros. Any fall in the euro against the dollar reduces the dollar value of both the asset and the debt. Your net equity in dollar terms moves, but the liability side automatically adjusts.
• Rental income in euros vs. euro debt service: For rented properties, both income and loan repayments are in euros. This significantly reduces the operating risk from currency moves; USD/EUR volatility mainly affects the translated returns, not the underlying cash-flow coverage.
• Limited need to time FX conversions: Instead of converting the full purchase price at one point in time, you convert smaller amounts of dollars into euros over the life of the loan (to cover down payment, fees, and periodic top-ups if needed). This effectively “averages” your entry rate across many years.

In 2025, euro mortgage rates for non-resident international buyers remain highly competitive, with long-term fixed-rate products offering visibility and stability that are often unavailable in other jurisdictions. US-based clients frequently find that locking a low or moderate fixed euro rate provides both an interest-rate anchor and a currency-management tool within a single structure.

5. Using Euro Debt to Mitigate a Poor Exchange Rate at Entry

Consider a scenario where the dollar is relatively weak at the time you wish to buy, making the euro “expensive” in USD terms. Borrowing in euros can mitigate this in several ways:

• Lower immediate FX conversion: If you finance, for example, 60–70% of the purchase price in euros, you only need to convert 30–40% of the property value into euros at the unfavourable rate for your initial equity contribution.
• Deferred FX exposure: Over the mortgage term, you can fund euro repayments either from euro income (e.g. rental) or by periodically converting dollars. If the dollar strengthens at a later date, subsequent conversions may occur at a better rate, improving your effective blended FX cost.
• Potential upside if EUR later weakens: If the euro depreciates against the dollar after you have taken out a fixed-rate euro loan, the real dollar cost of repaying that euro debt falls. You will be extinguishing a euro liability with increasingly “cheaper” dollars.

For HNW and ultra-HNW clients, this approach is often combined with broader balance-sheet thinking. Euro property can sit alongside euro-denominated liabilities, European operating income, or future lifestyle spending in the eurozone, turning what might otherwise look like “FX risk” into a deliberate geographic and currency diversification. In that framing, the question is not whether USD/EUR moves up or down in any given year, but whether the overall structure remains resilient across multiple currency regimes.

Conclusion: Structure Matters More Than Forecasts

Looking ahead to 2026, the most important takeaway for US buyers of French property is that exchange rates are unlikely to deliver a one-way, easily predictable outcome. Instead, they will continue to fluctuate within a range that is large enough to matter for real assets, but not so extreme that it can be reliably traded or timed.

Against that backdrop, the winning strategy is structural rather than speculative. Financing in euros, matching assets and liabilities, and spreading FX exposure over time can materially reduce the risk that currency movements overwhelm the underlying real-estate fundamentals. For buyers with a long-term horizon—whether lifestyle-driven expatriates or return-focused investors—this approach allows French property to function as what it should be: a stable, income-generating euro asset, not a leveraged FX bet.

In short, USD/EUR in 2026 will influence outcomes, but it does not need to dictate them. With thoughtful structuring and euro-denominated financing, US buyers can participate in the French property market with far greater confidence—whatever the dollar happens to do next.

For UK residents eyeing French property in 2026, the GBP/EUR exchange rate remains a pivotal factor in assessing investment viability. Borrowing in euros offers a robust mitigation strategy against adverse rate movements, stabilising acquisition costs and long-term holding expenses.

As of January 3, 2026, the GBP/EUR exchange rate trades at 1.148, consolidating a recent downward trend from the 1.20 highs seen in 2024.

For international buyers, this 1.15 level is a critical psychological and financial marker. While a weaker pound makes French real estate more expensive for cash buyers, it simultaneously strengthens the case for Euro-denominated financing as a protective hedge.

The Exchange Rate Reality: 2024–2026

Over the last 24 months, we have seen a transition from a strong-pound environment to a more balanced, if tighter, corridor.

• 2024 Peak: Sterling benefited from high UK interest rates, often trading between 1.18 and 1.21.
• 2025 Stabilization: As the Bank of England began its easing cycle, the rate settled into a 1.16 – 1.18 range.
• Current 2026 Position: At 1.148, the pound is testing a support floor. Analysts suggest that while the pound may see a modest recovery toward 1.18 by year-end, the current “entry price” for Euros is significantly higher than it was eighteen months ago.

The Cost of a “Wait and See” Strategy

The impact of this shift on a typical French property acquisition is substantial. For a €1.5 million villa on the Côte d’Azur:

• At 1.20 (2024): The cost was £1,250,000.
• At 1.15 (Today): The cost is £1,304,347.

This £54,000 currency premium represents an additional cost that provides no extra value to the asset itself. For international buyers, the challenge is clear: how to secure the property now without “locking in” a historically weak exchange rate on the entire purchase price?

Strategic Leveraging: The Euro-Mortgage Hedge

Euro-denominated borrowing is the primary tool used by non-resident buyers to mitigate this currency risk. By financing 70% to 80% of the purchase price, you drastically reduce your immediate Sterling exposure.

1. Lower Initial Capital Outlay: Instead of converting £1.3M at a 1.15 rate, you only convert the 25% deposit (approx. £326,000).
2. Debt-Asset Alignment: Your debt is held in Euros, matching the currency of the property. If the Euro strengthens further, your property value in Sterling rises, while your debt stays constant in Euro terms.
3. Future Repayment Flexibility: A Euro mortgage allows you to wait for a more favorable exchange rate (e.g., a return to 1.20+) before making large capital repayments or refinancing.

French Mortgage Conditions for Non-Residents in 2026

The French lending market has remained remarkably stable. Unlike the shorter fixed terms common in the UK, French banks continue to offer 20 to 25-year fixed rates.

• Current Rates: For well-qualified international buyers, rates are currently ranging between 3.6% and 4.3%.
• LTV (Loan to Value): Non-residents can typically access up to 70-85% LTV, depending on their country of residence and income structure.
• Tax Efficiency: Under the Impôt sur la Fortune Immobilière (IFI), mortgage debt is deductible from the property’s taxable value, providing a significant advantage for assets valued over €1.3 million.

Looking Ahead: Why Act Now?

While the pound is currently at a lower ebb, the French property market remains characterised by a chronic supply shortage. Prices in prime regions like Paris, Provence, and the Alps are projected to rise by 2% to 4% in 2026.

Waiting for a “perfect” exchange rate often means paying a higher property price that offsets any currency gain. By utilising a Euro mortgage today, you secure the asset at its current price while keeping your Sterling capital liquid and protected from immediate conversion losses.

Partnering with Experts for Seamless Execution

Navigating 2026’s GBP/EUR outlook demands specialised guidance. Bluesky Finance excels in structuring euro mortgages for international clients across the US, UK, and Middle East, ensuring competitive rates and swift approvals. Our bespoke strategies transform exchange rate headwinds into opportunities, securing your French property legacy.

In summary, while 2026 forecasts favor GBP stability, euro borrowing fortifies against volatility, preserving the allure of France’s premier real estate for discerning investors. Engage us to tailor your financing today.

After two years of significant adjustment, 2026 marks a new era of normalization for the French mortgage market. For non-residents, expatriates, and international investors, the landscape has shifted from the “rate shock” of 2023–2024 to a predictable, stabilized environment.

As we enter 2026, the key driver is no longer just the European Central Bank (ECB) policy, but how French lenders are specifically adapting their criteria for international profiles.

The New “Normal”: Where Rates Stand in 2026

In early 2026, the standard fixed-rate mortgage for prime profiles in France has settled into the 3.0% – 3.5% range for 20-year terms. This follows a steady retreat from the peaks of 2024, supported by the ECB’s decision to maintain key deposit rates around 2.0%.

For international buyers, the 2026 market offers three distinct advantages:

1. Rate Visibility: Unlike the floating-rate models common in the UK or US, France remains the stronghold of long-term fixed rates. Locking in a rate in the low 3s for 20 or 25 years provides unparalleled protection against future volatility.
2. Increased Lender Appetite: After a period of restriction, French banks have reopened their “international desks,” actively competing for high-quality non-resident files.
3. Inflation Alignment: With Eurozone inflation stabilized near 2%, the “real” cost of borrowing has become attractive again for those with multi-currency income streams.

How ECB Policy Benefits Non-Residents in 2026

While the ECB sets short-term liquidity costs, French fixed rates are priced off the OAT yields (French Government Bonds) and Euro swap curves. In 2026, these indicators suggest:

• Incremental Easing: Expect small, periodic adjustments rather than a rapid pivot.
• A Solid Floor: There is no return to the “zero-rate” era of 2019. The 2026 corridor represents a sustainable “neutral” rate.

For the international buyer, this means the timing risk has diminished. The frantic wait for a “trough” has been replaced by a window of opportunity to structure long-term leverage before any potential late-cycle re-tightening.

2026 Rate Benchmarks: What to Expect

Based on current market data, Bluesky Finance projects the following benchmarks for prime international profiles:

Note: Non-residents typically pay a premium of 25–60 bps over resident rates, though this gap is narrowing for profiles with strong global assets.

Strategic Advantages for the International Investor

1. Currency Hedging & Diversification

For buyers from the UK, US, or Middle East, a French mortgage serves as a natural Euro hedge. By financing a property in the local currency, you protect your capital against exchange rate fluctuations while benefiting from the relative stability of the Eurozone’s legal framework.

2. Optimization of the IFI (Wealth Tax)

Real estate in France is subject to the Impôt sur la Fortune Immobilière (IFI) once net assets exceed €1.3M. In 2026, maintaining strategic leverage remains the primary tool for international owners to offset their taxable base. A fixed-rate loan at 3.5% often proves more “profitable” than a cash purchase when tax deductions are factored in.

3. Competitive Advantage over Home Markets

Compared to the higher base rates currently seen in the UK or the US, French financing remains remarkably competitive. For an international buyer, borrowing in France is often cheaper than securing equity-release in their home jurisdiction.

Closing the Deal in 2026: The Bluesky Approach

The 2026 market rewards preparation over speed. French banks have tightened their “Green Compliance” (DPE ratings) and require transparent documentation of global income.

Summary: 2026 is the year of the Strategic Acquisition. With rates stabilized and lenders eager for international business, the environment is ideal for securing a legacy asset in France with optimized, long-term financing.

For international Buyers and French expats, this environment supports a proactive stance: rather than waiting for a perfect rate that may never materialise, 2026 offers the opportunity to secure long‑term, euro‑denominated funding on terms that can be optimised across tax, liquidity and risk – while the ECB’s policy wind is finally at your back.

Buying property abroad is a dream for many – but for international buyers, the process can also be filled with uncertainty. In our latest webinar, Confidently Buying Property in France, experts unpacked the French real estate market, explained financing options for non-residents, and shared practical tips to help you navigate every stage of the purchase process.

Whether you’re planning an investment property, a holiday home, or a future retirement move, this session offers actionable insights to guide your next steps.

Why This Webinar Matters

France remains one of the most popular destinations in the world for international property buyers – celebrated for its quality of life, varied regions, and strong legal protections for buyers. But buying abroad comes with distinct legal, tax, and financing challenges. This webinar was designed to demystify the process and equip potential buyers with knowledge they can act on.

What We Covered

1. Understanding the French Market

The webinar kicks off with an overview of current market trends in France including how prices vary regionally and how demand from international buyers has shaped recent activity. Historic cities, seaside towns, and countryside properties each come with unique opportunities and considerations.

2. Navigating Financing as a Non-Resident

One of the most critical barriers for international buyers is financing. Our speakers walk through:

• How French mortgages work for non-residents
• Typical loan-to-value ratios and down-payment expectations
• Differences in interest rates for locals vs. international applicants

The key takeaway? International buyers can absolutely secure financing – but preparation and a strong application are essential.

3. Legal & Tax Considerations

France has robust protections for property buyers — but it also has its own legal and tax frameworks. This segment covered:

• Notaire fees (the role of the French notary)
• Transfer taxes
• Long-term ownership implications for non-EU residents

Understanding these up front can prevent surprises and help buyers budget more accurately.

4. Practical Tips from the Experts

Finally, speakers share practical advice, including:

• How to choose the right real estate agent
• The importance of site visits vs. virtual tours
• When to engage lawyers, translators, and finance specialists

These insider tips help bridge the gap between theory and successful purchase.

Key Takeaways

• Preparation wins: Do your homework before making an offer.
• Financing is achievable: Even as a non-resident, you can secure a mortgage in France with the right documentation and strategy.
• Local expertise matters: A trusted agent and legal advisor will smooth the path from offer to closing.

Who Should Watch This

This webinar is ideal for:

• First-time international buyers
• Investors exploring European real estate
• Buyers curious about financing options abroad

Whether you’re just starting your research or ready to begin the buying process, the insights shared here will set you up for success.

Watch the full webinar above — and don’t forget to subscribe for more expert content like this on property buying and global investment strategies.

As we enter 2026, the French real estate market has moved beyond the “wait-and-see” phase of previous years. Following a period of correction and stabilization throughout 2025, the housing market is now characterized by measured growth and a return to rational transaction volumes.

Data from the Chambre des Notaires, Insee, and MeilleurAgents suggest a national price increase of 2% to 3% for 2026, reflecting a market that is healthy but no longer speculative.

Market Review: The 2025 Rebound

The year 2025 served as a turning point. After reaching a low in 2024, transaction volumes saw a significant recovery, driven by a more fluid lending environment.

• Transaction Volumes: Sales of existing homes rebounded to approximately 925,000 units annually by late 2025 (+11% year-on-year), a level similar to 2017 benchmarks (Source: Conseil Supérieur du Notariat).
• Price Stabilization: According to Insee, national prices for existing apartments rose by +1.3% in late 2025, while house prices grew by a modest +0.2%, signaling the end of the downward cycle.

Key Drivers for 2026

1. The New Interest Rate “Norm”

The era of 1% rates is over, but 2026 offers stability. The Observatoire Crédit Logement/CSA notes that mortgage rates have plateaued. For a 20-year term, average rates are projected to fluctuate between 3.2% and 3.6% throughout 2026. This predictability allows buyers to plan long-term acquisitions with confidence, as the “shock” of previous rate hikes has been fully absorbed by market prices.

2. Structural Supply Scarcity

A critical factor supporting prices in 2026 is the persistent housing deficit. BPCE Group studies highlight a continuing stagnation in new builds (the neuf sector), which funnels demand into the existing market (l’ancien). With authorized housing starts lagging far behind the national demand of 400,000 units, supply-side pressure remains a primary floor for property values.

3. The “Green” Valuation Gap

Energy performance is now a central pillar of property valuation. The Notaires de France report that the price gap based on DPE (Energy Performance Certificate) ratings is widening:

• A-B rated homes command a 10% to 15% premium in most regions.
• G-rated properties (“passoires thermiques”) face value discounts of up to 25% in certain provinces, offering strategic entry points for investors willing to undertake renovation projects.

Regional Forecasts: 2026 Growth Projections

Strategic Insights for Buyers

For those entering the market in 2026, the focus has shifted from “market timing” to asset quality.

• The “Value” Sector: Mid-sized cities in the Grand Ouest and Grand Est continue to offer attractive yields.
• Financing Advantage: Specialized lending continues to be accessible. While banks remain diligent regarding debt-to-income ratios, the stabilization of the OAT 10-year (government bond yield) around 3.1% – 3.5% provides a stable backdrop for bank margins and competitive borrower offers.
• Renovation Incentives: With the 2026 regulatory calendar tightening for rental properties, “D” and “E” rated properties represent the most fertile ground for negotiation, as sellers look to exit before new renovation mandates take full effect.

Summary: The 2026 French property market is defined by stability and selectivity. With rates having found their equilibrium and prices rising modestly, it remains one of Europe’s most secure environments for long-term capital preservation

SeLoger and Meilleurs Agents’ January 2025 barometer has painted a promising picture of the French property market’s recovery. After a challenging 2023, the market has shown signs of stabilization, with increased transactions and a slight uptick in prices.

Key Findings:

• Stabilizing Prices:  The national average price has settled at €3,060/m², with a minimal decrease of 0.1%. Paris, while still commanding a premium at €9,355/m², has also experienced a slight price correction.
• Increased Transactions: The number of transactions in 2024 neared 800,000, exceeding initial expectations. This surge can be attributed to increased purchasing power driven by lower interest rates.
• Regional Variations: While national prices have stabilized, regional markets exhibit diverse trends. Cities like Strasbourg and Lille saw price increases in December, while Nantes experienced a decline.
  – Strasbourg: Experienced a 0.5% price increase in December 2024.
  – Lille: Saw a 0.5% price increase in December 2024.
  – Nantes: Experienced a 0.6% price decrease in December 2024.
• Demand Surge: Demand for real estate has risen significantly, especially in major cities like Toulouse (37% increase), Bordeaux (38% increase), and Paris (31% increase). However, the abundance of properties gives buyers a degree of negotiation power.

Factors Driving the Recovery:

• Lower Interest Rates: The European Central Bank’s accommodative monetary policy has led to a decrease in average credit rates.
• Average credit rates decreased from 4.35% to 3.5% in 2024, significantly improving affordability for many buyers.
• Increased Purchasing Power: Higher incomes and lower interest rates have boosted household purchasing power, fueling demand.
• Stabilized Economic Conditions: A more stable economic environment has instilled confidence in buyers.

Outlook for 2025

The market is expected to continue its recovery in 2025, with potential for further price increases. However, several factors could influence this trajectory:

• Interest Rates:
  – If interest rates remain low or continue to decline, it could further stimulate demand and drive prices up.
  – Prediction: Forecasts suggest a slight further decrease in mortgage rates in 2025, potentially to around 3%.
• Economic Uncertainty:  Political and economic uncertainties, both domestically and globally, could dampen buyer sentiment.
• Regulatory Changes: New government policies or regulations could impact the market, either positively or negatively.

Analysis of Notaires de France Report

The Notaires de France report corroborates these findings, highlighting a stabilization of prices after a period of decline. The report also emphasizes:

• Decreasing transaction volumes: While the market is recovering, transaction volumes are still below pre-pandemic levels.
  – Transaction volumes in 2024 are estimated to be around 750,000, a significant decrease from 1.13 million in 2022.
• Importance of economic stability:  The report stresses the need for a stable economic environment to sustain the market’s recovery.
• Focus on energy efficiency The report notes a growing trend towards energy-efficient properties, with buyers increasingly prioritizing homes with higher energy ratings.
  – The share of sales of the least energy-efficient homes (classes F and G) has decreased in 2024, while the share of the most energy-efficient homes (classes A and B) has increased.

Conclusion

The French property market appears to be on a path to recovery, with stabilizing prices and increased transactions. While the market is subject to various economic and political factors, the current outlook is positive. Buyers can expect a more balanced market with opportunities in both established and emerging areas. However, it is crucial to stay informed about market trends and consult with real estate professionals to make informed decisions.

Key takeaways for potential buyers and investors:

• Consider regional variations: Different regions may exhibit different trends.
  Focus on long-term value: Look for properties with strong fundamentals and potential for appreciation.
  Stay informed about market changes: Keep abreast of interest rate movements, government policies, and economic indicators.
• Consult with experts: Seek advice from real estate professionals to navigate the market effectively.

The French real estate market is experiencing a slowdown, and the situation is not expected to improve in 2024. This is attributed to a challenging economic period marked by inflation, resulting in a decline in the purchasing power of the French population. Additionally, the rise in bank interest rates is making access to credit more difficult. As a consequence, property sales have been decreasing towards the end of 2023, and this trend is likely to persist, as highlighted by various studies.

Decrease in Sales and Prices
The Notaires de France report a decline in the number of property sales in 2023. While 1.13 million sales were recorded between September 2021 and September 2022, only 928,000 were reported in the same period the following year. The real estate barometer FNAIM-Clameur for December 2023 notes a significant decrease, stating, “The decrease in the number of transactions has accelerated since 2023, reaching 908,000 sales in France (-20% year-on-year) over the 12 months ending October 2023.”

Simultaneously, there is a drop in prices towards the end of the year, marking the first decrease since 2015. The Notaires de France observe a nationwide decrease, particularly pronounced in the Île-de-France region. The price index for existing apartments in metropolitan France decreases by 2% annually, and for existing houses, it drops by 1.6%. In Île-de-France, the index drops by 5.3% for apartments and 5.4% for houses. This downward trend is expected to continue into 2024.

Stagnant Buying Intentions
Despite expectations that mortgage rates will stabilize after recent highs, the FNAIM-Clameur real estate barometer predicts a rate around 4.3% in the first quarter of 2024. However, industry stakeholders are not optimistic about a market recovery in the coming year. According to the study “Les Français et l’immobilier” conducted by OpinionWay for Laforêt, buying intentions for the next year remain stagnant compared to those for 2023.

Economic conditions have led nearly one in four French individuals to cancel or postpone their real estate projects, with access to credit being a significant obstacle. For those under 35, 39% had to delay or cancel their plans, while only 12% of those over 50 faced similar challenges, according to the OpinionWay survey.

Mortgage finance as a key driver
REALITES, a prominent player in the French real estate sector, provides insights into the trends and developments for the upcoming year. Mortgage finance, a key driver of the real estate market, is currently being granted cautiously. The rise in interest rates and stricter lending conditions are limiting access to mortgage credit. With inflation’s return, banks have increased rates beyond 4% for 20- or 25-year mortgages, and this upward trend may continue in 2024 due to the European Central Bank’s need to control inflation and support the euro.

Despite these challenges, demand remains resilient, with buyers seeking properties with appealing outdoor spaces, influenced by the memories of pandemic-related lockdowns. REALITES addresses this demand by focusing on the outdoor features of its residences.

In 2023, prices began to decline, and this trend is expected to intensify in 2024, reaching a 4% average decrease. The decline is more pronounced in metropolitan areas, such as Paris, Bordeaux, and Lyon. The average time to sell a property has increased to 85 days, with Paris experiencing an increase from 59 days in 2022 to 80 days in 2023. The delay is even more significant in regions like Auvergne-Rhône-Alpes and Occitanie, reaching 100 days.

While sellers are delaying their plans, limiting the decline in prices, the overall market imbalance is expected to persist in 2024. The tightening of financing conditions over the past two years has significantly impacted real estate transactions, with a 20% decrease in 2023, reaching the lowest level in seven years.

Key Points for the Evolution of Real Estate in 2024:

– Mortgage rates expected to stabilize between 4% and 5%.

– Personal contribution requirement likely to remain around 10% to 20%.

– Anticipated 10% to 20% decrease in transaction volume.

– Expected 4% average decline in property prices.

– Extended selling periods ranging from 80 to 100 days by region.

– Demand for apartments with outdoor spaces near employment centers.

The new realities of the French real estate market in 2024 present challenges, but they also open doors to strategic opportunities. Navigating these changes requires a nuanced approach, emphasizing renovation, energy efficiency, and adaptability to market shifts. As the landscape evolves, stakeholders in the real estate sector will need to stay agile and informed to make the most of the emerging trends and capitalize on the potential for growth and innovation in the market.

It’s early 2021, we are all impacted by lockdowns and strict travel restrictions. Against all odds, Non-Resident buyers are still active in the French property market. Here is a brief overview of mortgage lending in a post BREXIT world :

• Overall, few changes as a result of BREXIT but some new pitfalls to be mindful of… The end of the EU financial passporting system has become a significant hurdle for UK intermediaries. EU lenders have taken steps to avoid being regulated by the UK FCA. More hoops to jump for British residents but nothing that can’t be overcome.

• Many individuals can’t get what they are looking for… Large disconnects between expectations and reality… Sadly, lending propositions do not meet demand

• Most lenders and insurance companies are able to accommodate a full remote origination process (No travel required). The most challenging aspect of processing a case remotely is often related with the mortgage Life Insurance application process. Undertaking medicals required by insurance companies can be challenging in periods of lockdowns and over-stretched health resources.

• Interest rates remain extremely low. No pricing for risk…. You are either in or out.

• Strict lending underwriting criteria… strong emphasis on affordability

• “Escape to the Château” may be fun to watch but won’t get lenders excited…. Gîtes, Fishing lakes, wedding venues etc even with the most robust business plans will have to be self funded

• Interest-only plans without collateral available up to 75% / 80% LTV

• Capital repayment plans available up to 85% LTV

• Duration up to 20 years. 25 years at a stretch

• Limited appetite for small amounts (<€150k), complex deals and non salaried applicants

• Lower rates available with Assets Under Management at ~60% LTV

• Lending to US persons still impacted by FATCA but some interesting propositions available

• Service is “hit and miss” and generally slow …. Depends on who you know. People trump processes…

• Private bank lending a good option for assets >€1m…. better service & expertise

Bluesky Finance is a France based independent specialist mortgage broker. We search and arrange high-quality mortgage solutions for international buyers. contact@bluesky-finance.com + 33 (0) 9 82 56 61 57 More information

If you have plans to relocate to France, you may be eligible for very advantageous tax arrangements, subject to certain conditions.

The expatriate tax regime applies to individuals who were not residents of France for tax purposes during the five calendar years prior to their taking up their duties in a company based in France.

Read more…

Most French mortgages come with early repayment fees or penalties also know as ERC. If you have an existing French mortgage and are contemplating remortgaging in France, there are several things you need to be aware of .
Firstly ERCs are capped by law and cannot exceed the lower of 3% of the outstanding mortgage amount or the equivalent of interests paid over a 6 months period.
Besides, under certain circumstances, French lenders are not permitted to charge ERCs. More specifically, ERCs cannot be applied to French mortgages advanced after 1 July 1999 if the redemption of the French mortgage is due to :

1. the sale of the French property and the sale of the french property is correlated with a change of employment
2. the death of the borrower or co-borrower
3. unemployment of one of the borrowers

For more information