You can still get a twenty year fixed rate mortgage at 2.15%. And house prices in France are still low. If your ten or fifteen year dream has been to move to France – or buy a holiday home – a fluctuating pound is well compensated by low interest rates.
‘There has been no drop in interest in buying in France,’ says Simon Smallwood, Business Development Director at International Private Finance. ‘But we are seeing that people are more reluctant to be cash buyers. With the uncertainty of the financial markets, they are more nervous about using all their sterling savings and are opting for part-cash, part-euro mortgages. The same as happened during the eurozone crisis.’
One concern was that French lenders would become reluctant to finance British purchases after the Leave vote, says Smallwood. ‘But our feedback from the banks is quite the opposite. They are concerned that Brits may be put off buying in France because of Brexit so they are putting together even more attractive packages and we could see interest rates fall further.’
Smallwood doesn’t see the French lenders’ love affair with the British ending any time soon. ‘They like the British. We make up the biggest percentage of foreign buyers and they are comfortable lending to us. They understand the British, understand how they work, how they earn their income in a way they don’t with buyers from more remote countries.’
The advantages of a French mortgage is that you can use the French property you are purchasing as security. UK lenders need security in the UK. ‘Also,’ says Smallwood, ‘in times of financial uncertainty, borrowers feel safer making repayments in the same currency as the purchase as this reduces exchange rate risks.’
As EU citizens, British buyers can borrow up to 80% of the purchase price; post-Brexit this will drop to 60-65%, the amount allowed to non-Europeans.
People are concerned that Brexit will make it difficult to get a mortgage but, believes Smallwood, even when Britain has left the EU, French lenders will still look favourably on British applicants.
For now, borrowing costs are not likely to go up in the short term as banks will be cautious about raising rates. Long term, however, is impossible to predict.