What is changing for French mortgages?
From February 2024, mortgage applicants who have seen their application for a French mortgage refused will have the right to ask the bank for a second study of their application and for the reasons for the refusal. This right is due to last until the end of December 2024 but temporary measures are often renewed. This measure has been introduced by the Fédération bancaire française at the request of the French banking regulator, la Banque de France.
Have refusals for French mortgages become more common?
Yes, in 2023 the number of French mortgages completed fell to its lowest level in eight years. This is likely a result of a combination of interest rates having increased from historic lows, higher expectations for future inflation, and banking regulations limiting how much interest banks can charge, therefore banks have not been able to pass all of the increased costs onto future borrowers and instead reduced the number of French mortgages being offered.
What are the conditions?
- The bank retains the sole right to make a decision on your mortgage application
- The process and the information will be specific to each bank, but they must follow general guidelines
- The client can only make this request to the bank that refused their mortgage.
- The request must be made by the client or potential client, it is not an automatic second review that is being proposed
- Before asking for a second review, the mortgage applicant must make sure that they meet the bank’s financial criteria. If the file has been refused because the client is clearly over-indebted and the mortgage is clearly unaffordable, then there is no right to a second study.
- The client mustn’t be registered on the French list of loan defaulters, le Fichier national des incidents de remboursement des crédits aux particuliers (FICP)
- The loan application must be for one of the following purposes: primary residence purchase, second home / holiday home purchase or a buy-to-let property purchase.
What problems could arise?
In theory, it all sounds very good, but from years of doing French mortgages, I can tell you that banks often ignore their own criteria and that many mortgage applications fail simply because your application is complicated and the bank or banker is too busy to consider it properly. Hopefully this measure will encourage banks to study more applications correctly. If you are a non-resident or most of your documents are foreign, then please bear in mind that if you applied for a mortgage in your home country with a bunch of foreign documents, then it would also be complicated.
Useful links:
1.https://aisainternational.fr/investments/french-mortgages-faq/
2.https://www.lafinancepourtous.com/2024/02/08/credit-immobilier-une-seconde-chance-en-cas-de-refus/
The views expressed in this article are not to be construed as personal advice. Therefore, you should contact a qualified, and ideally, regulated adviser in order to obtain up-to-date personal advice with regard to your own personal circumstances. Consequently, if you do not, then you are acting under your own authority and deemed “execution only”. Additionally, the author does not accept any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Importantly, this article is dated and is based on legislation as of the date. It should be noted that legislation changes, but articles are rarely updated. Sometimes a new article is written; so, please check for later articles. Additionally, check for changes in legislation on official government websites. Finally, this article should not be relied on in isolation.
