Prudent lending in France

Property prices in France are remaining stable due to a more prudent approach to lending, it is claimed.

While mortgages in the UK are becoming more difficult to obtain and there are fewer products on offer, the provision of credit across the Channel has been traditionally tighter so there is less household debt and less price fluctuation.

French borrowers generally have to meet more stringent targets. Outgoings (including the mortgage for which you are applying) should not surpass 33% of your gross income. If you are self employed two years of audited accounts are required.

It is also easier now than it was five years ago for non-residents to obtain a mortgage from French lenders. If you are buying to let some lenders will take into account future rental income.

Sharon Hill, Director of French Mortgage Direct said it is now common for non-resident purchasers to obtain a 90% fixed rate mortgage in France which has helped a lot of purchasers realise their dream of owning a property in France despite the weaker pound. In some areas a 100% mortgage is possible.

'French property provides a sound investment for those wishing to ride out the storm of the credit crunch and now that mortgage conditions across the channel have become more favourable, this can only increase the pull of France for many British buyers,' she said.

Property prices are expected to remain stable and continue to rise in popular areas. 'I think we will be touched by this crisis, but not so much and not in the same way as elsewhere. I don't think prices will change very much,' said Jean-François Gabilla, president of the Fédération des Promoteurs Constructeurs de France, which represents construction companies.

The national average price rise is expected to be 6-8% for 2008, but certain areas and types of properties will outperform the national average. Prices in key areas within the Languedoc, Dordogne, south Limousin and Lot-et-Garonne are most likely to rise above the national average predictions, perhaps with growth of up to 15%.

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