Mortgages in France 2007 (Market Guide)

A rise in dwelling housing stock in the past three years coupled with tighter lending conditions have slowed the growth of the French mortgage market. What are the current issues facing this market? How are housing policies affecting its performance? Who are the biggest lenders? What will be the size of the sector in the next five years? This report provides the answers.



Report Highlights
Prior to the fourth quarter of 2005, typical mortgage interest rates decreased in France by 0.85 percentage points from 4.35% in the third quarter of 2004 to 3.5% in the fourth quarter of 2005. However, typical mortgage rates have been on the increase since then, reaching 4.3% in the second quarter of 2007. Unsurprisingly, while mortgage interest rates fell significantly in the 200305 period, remortgaging became more popular in the French mortgage market. However, the increase in mortgage interest rates since early 2006 has slowed down this upward trend in remortgaging. Mutual and co-operative banks and commercial banks held a share of 53.6% and 34.6% respectively in terms of home loans balances at the end of 2006.


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Overview 1
Catalyst 1
Summary 1
Executive Summary 2
Market size 2
Market forecasts 3
Key issues 3
Key market players 4
Contents 5
Figures 6
Tables 7
Market Context 7
Country overview 7
Demographics data on a selection of major western European countries 9
Population 9
Economy 10
Housing market 15
Dwelling stock 15
House prices 17
Government housing intervention 18
Taxes, subsidies and housing schemes 18
Market data 20
Mortgage interest rates 20
Market size 21
Balances outstanding 21
Gross advances 24
Product lines 25
Market structure 26
Structure of the French retail banking sector 26
Categories of banks 28
Commercial banks 28
Mutual and co-operative banks 28
Municipal credit banks (Caisses de crédit municipal) 28
The French banking structure is more complex than it seems 29
Finance houses are important players in the retail finance market 30
Mortgage market structure 30
Mortgage market share by type of player 32
Funding 32
Distribution 33
Regulatory environment 34
Industry regulators 36
Banque de France 36
Commission Bancaire 36
The CECEI 36
The CRBF 36
Industry associations 36
Groupement des Cartes Bancaires 36
The Association Française des Etablissements de Crédit et des Entreprises d'Investissements 37
The ASF 37
The FBF 37
Other noteworthy associations 38
Credit bureaus 39
Regulatory issues and developments in the mortgage market 39
The birth of an integrated European mortgage market is still very far off 39
Basel II will mean a number of changes for lenders 40
Recent national mortgage-related legislation 41
Key issues in the mortgage market 42
Competitor and Product Overview 43
Top five mortgage lenders 43
Market share by balances outstanding 43
Product analysis 45
Typical product characteristics 45
Market Forecasts 46
Forecasting gross advances 46
Gross advances in the French residential mortgage market will reach €235.9 billion in 2011 46
Future prospects 48
Market attractiveness 48
Market inhibitors 48
APPENDIX 50
Supplementary data 50
Tables relating to Chapter 2: Market Context 50
Definitions 52
Balances outstanding 52
CAGR 52
Capped mortgage 52
Equity release 52
Fixed rate mortgage 52
Gross advances 52
Loan-to-value (LTV) 52
Mortgage intermediary 52
Remortgaging 52
Variable mortgage 52
Forecasting methodology 53
Research methodology 53
Further reading 54
European Mortgages 54
Ask the analyst 54
Datamonitor consulting 54
Disclaimer 55

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Table 1: Forecast of residential mortgage gross advances in the French market , 2005-11f, (€m) 3
Table 2: Total population across major western European countries, 2002-06 9
Table 3: GDP at current rates across major western European countries, 2002-06, (€bn) 10
Table 4: GDP per capita at current rates across major western European countries, 2002-06, (€) 11
Table 5: GDP growth rates across major western European countries, 2002-06, (%) 12
Table 6: GDP composition by sector across major western European countries, 2006, (%) 13
Table 7: Inflation across major European countries, 2002-06, (%) 14
Table 8: Unemployment rates across major western European countries, 2002-06, (%) 15
Table 9: Age of France's dwelling stock, 2002 16
Table 10: Residential mortgage balances outstanding compared to GDP of selected European countries, 2006 24
Table 11: Main players under each pillar in the French banking industry, 2007 29
Table 12: Examples of finance houses in France, 2007 30
Table 13: Market share of the top five competitors in the French residential mortgage market in terms of balances outstanding, 2005-06 44
Table 14: Forecast of residential mortgage gross advances in the French market, 2005-11f, (€m) 47
Table 15: Total dwelling stock in France, 1999-03, (000s) 50
Table 16: Average house price growth in the French residential mortgage market, 2002-06 50
Table 17: Typical mortgage interest rates in the French residential market and ECB base rates, Q3 2004-Q4 2006, (%) 50
Table 18: Mortgage gross advances and balances outstanding in the French mortgage market, 2002-06, (€m) 51
Table 19: Market shares of home loans in France by legal categories, 2004-06 51
Table 20: Net lending in the French mortgage market, 2002-06, (€) 51


Figure 1: Gross advances have been growing steadily in France, 2002-06 2
Figure 2: Crédit Agricole is by far the leader in the French mortgage market, 2005-06 4
Figure 3: A snapshot of France's key statistics, 2006 8
Figure 4: Housing stock in France grew slowly between 1999 and 2003 16
Figure 5: France has an owner-occupation rate of 56%, 2002 17
Figure 6: After reaching a peak in 2004, average house price growth in France slowed in 2005 and 2006 18
Figure 7: Typical mortgage interest rates in France stood at 3.90% in the fourth quarter of 2006 21
Figure 8: Mortgage balances outstanding have experienced strong growth in France, 2002-06 22
Figure 9: Net mortgage lending in France reached €74.2 billion in 2006, 2002-06, (€m) 23
Figure 10: Gross advances have been growing steadily in France, 2002-06 25
Figure 11: Remortgaging accounted for roughly 35% of gross advances in the French mortgage market in 2006 26
Figure 12: The three pillars of the French banking structure, 2007 27
Figure 13: Commercial banks in France have slightly increased their market shares of home loans over the last few years 32
Figure 14: Regulatory overview of France, 2007 35
Figure 15: Crédit Agricole is by far the leader in the French mortgage market, 2005-06 43
Figure 16: Gross advances in France are forecast to reach €235.9 billion in 2011 46

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