Property Trends 2012

Photo: guy harrop / Alamy  

French banks, following in the footsteps of American mortgage lenders, are making it harder for home buyers to get a loan. Expat borrowers and French residents alike are being told "non" unless they have very large deposits and lofty incomes. BNP Paribas, one of France's biggest lenders to expatriates, overhauled its mortgage range for non-residents and has cut loan-to-value ratios from 80% to 70%.  They've also chopped the terms on interest-only loans -- but then these loans have always struck me as a perfectly terrible way to borrow money.  French banks are being cautious and rejecting borrowers with loan debt exceeding six times their income.  This seems reasonable to me, but it could affect people with several buy-to-rent properties or even some first-time buyers.  But then again, perhaps someone so heavily leveraged should rent for awhile before taking on more debt.  Call me old fashioned.

Despite the tightened lending, borrowers with sufficient income and smaller debt can still get a loan and French mortgage rates continue to look attractive.  French residents, more conservative borrowers than Americans, tend to like long, fixed-term rates and the interest rate on a 25-year-term is now set at around 4.4%.  There's also something called a capped rate deal where borrowers are promised they will not pay more than 4.5% for the term of the loan and the current rate for these is just 3.5%.

Meanwhile, FrenchEntrée just published their annual property survey based on feedback from their network of immobiliers (real estate agents) and property finders across France.  A few interesting items jumped out at me from this year's report, which showed real estate sales pretty grim in some parts of country but lively in others:

• There seemed to be fewer buyers from the UK last year, except in the Alps and Cotes d'Azur, but this was made up for by French, Dutch and Belgian buyers.  Increased interest from Australian and American buyers also showed an uptick. 
• Paris had a stunning year with a 22% increase in property values in the first half of 2011, although that pace slowed significantly as the year progressed. The number of transactions was down, but only because there weren't any properties to sell.  The 3rd and 4th arrondissements were hot.  
• The Languedoc saw more American buyers, as well as people from Sweden, Norway, Denmark and, of course, French seeking homes. The region already has an enormous British community.  A lot of people are taking a look at the Languedoc, which borders Spain, because of the anticipated completion of the TGV link to Barcelona at the end of this year.  Travelers will be able to get from Perpignan to Barcelona in less than an hour. Tapas for lunch! 

With all the gloomy economic news out of Europe, this all looks rather encouraging.

A la banque

If you are serious about buying property, signing up for electricity, water and phone, or even just renting for very long, you'll need a French bank account. For shorter visits or holidays, your home counry Visa, Master Card or American Express card will work fine, although there are often high fees associated with currency conversions on purchases. But for most large transactions associated with buying a home, you'll need a French bank account.

It makes sense to choose a major national bank with lots of branches. All banks will require a variety of documents: personal identification in the form of a passport, proof of your home address in France (a telephone or electcity bill less than three months old , rental agreement or bill of sale) and some written proof of income like a wage statement of a bank statement from your home bank showing balances and a small deposit to open the account. I deposted $25.

There are so many foreigners now moving to France, that many banks have special offices or representatives who speak English and are dedicated to helping a foreigner settle in. Ask friends, neighbors, acquaintances and business contacts to recommend a bank since an introduction, even from someone you don't know very well, can ease and hasten the process.

Since 2006, the French postal service, La Poste, also offers full banking services but for the services an expat needs -- currency exchanges, mortgages, investment advice -- the bureaucrats at the poste are not yet up to speed. To be fair, it really isn't their main job. La Banque Postal Website offers information in English, including a glossary of French financial terms that will come in handy no matter where you choose to bank.

Online banking is now available through the big banks, but the sites vary widely and most banks charge a monthly fee for online access, which is a little shocking if you're used to banking in the States. In fact, there do seem to be rather more fees attached to all services offered by French banks.

ATMs are ubiquitous, usually found on main commercial streets,at the entry to banks and at post offices. The "distributeurs automatique de billets" charge fees as they do in the States, but if you need Euros, this is often less costly than changing cash at a currency exchange. In France, people also pay for everything, even tiny purchases like coffee and a croissant, by check. A French check book, chequier, will make you look and feel like a local and the checks will be welcome everywhere. There are very stiff penalities for bouncing a check in France so checks are treated the same as cash. If you write a check and have insufficient funds, you run the risk of not being able to write another check for five years. Track your balance closely or arrange for overdraft protection.

Wendy recommended that I speak with Robin Boxall at Banque Chaix, a division of the giant HSBC. Banque Chaix had branches in all the southern French cities, Montpelier, Nimes, Avignon, Uzes. Robin, a British man married to a French woman, provides what is essentially concierge service for the bank's Anglophone customers.

Robin was delightful, explaining the process, promptly emailing the documents and finding a HSBC branch in Manhattan, a few blocks from my office, where I could drop off the papers to expedite opening the account. I filled out the papers, dropped them at the NY branch, and had my new French bank account open within one week. He has been consistently helpful at every step, always available by email and ready to answer questions and solve small problems. Genuine personal banking.

When I arrived to look for a house, one of my first stops was Banque Chaix in Uzes. I transferred money into the waiting account for a deposit if I found a house, picked up my crisp new checks and was on my way.

Other major French banks to consider, include:
Le Crédit Agricole
Le Crédit Lyonnais
La BNP Paribas with branches in Chicago, Dallas, Houston, King of Prussia, New York, Los Angeles, Miami and San Franciso
La Caisse d"Epargne

For the moment, I'd stay away from La Société Générale until they can figure out how they misplaced $7.2 billion. If they can lose a sum that large....