France 'survives credit crunch'
Since the term credit crunch entered the lexicon at some point last year, the mortgage market has become tougher in the UK, with this week's withdrawal of 125 per cent mortgage products being the latest reduction in the availability of products with which to buy property in Britain.
In France, however, it appears the opposite has occurred. In recent years the country, whose president Nicolas Sarkozy pledged to create a nation of homeowners, has seen a major boom. More significantly, this is continuing, thanks to a series of ever more competitive mortgages, financial services firm Blevin Franks has stated.
Matthew Weston, the overseas French mortgages manager at the firm, said: "So far this year the subprime crisis has had little to no impact on the non-resident France property investment market in France."
Part of this, he suggested, was the way the market in France had reacted to the situation: "In the wake of the credit crunch, French banker's trepidation that this boom may be over may explain why so many lenders this year are offering new or enhanced products and cut-cost discounts than ever before."
As a result, he said, loan-to-value ranges had increased rather than shrinking, the length of loans had become greater and set-up fees had fallen. The result of this, he noted was an increase in mortgage lending in the last three months of 2007, which was 3.8 per cent up on the equivalent period in 2006.
There may be many reasons behind this very different reaction to events in France. One may be the fact that, as Mr Weston pointed out, the French banks did not suffer comparable losses on subprime securitised bonds. Another might be that there has not been a Northern Rock-style calamity, with the one French financial institution to get into trouble recently doing so not because of the credit crunch so much as the rogue actions of one employee performing his best Nick Leeson impression.
Whatever the reasons for the situation, UK buy-to-let investors may wish to make the most of this situation and pick up cheaper deals for property in a popular country for British ex-pats and holidaymakers.
There are other costs which buyers should be aware of, however. In a Daily Telegraph report on buying property in France, the manager of Savills Private Finance International, Miranda John, said both agents and sellers could charge additional fees to buyers. She stated: "This fee can be added to your mortgage, but can be up to five per cent of the sale price of the property - so make sure you check the agent's fees before putting in an offer and calculating your budget."
Many, however, might consider any additions to fees to be a fair trade-off in comparison with the difference a mortgage might cost in France compared to the UK at present. As long as the French are able to keep the credit crunch at arm's length, the market for French property may remain attractive.
In today's world Property investment is an excellent investment option especially investment in UK
Jim Barnaby is a real estate investment broker and successful property investment adviser delivering research and selected UK and overseas property investment solutions with experience in spanish properties,holiday home sales, German property, Cyprus holiday homes, France, Spain and Germany holiday homes, Property Cape Verde, buy to let properties. http://france.assetz.co.uk
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