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A third of Brits opt for French mortgage

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Due to the rapid increase in financial deals available within France, nearly a third of Brits buying property over the channel are now opting for mortgages from local providers.

The continuing strength of the pound against the euro and the mushrooming number of financial arrangements on offer in France has led to British holiday home hunters turning their banks on British banks, according to the country's top mortgage lender Credit Foncier de France.

Although some novice property investors will be put off looking for homes overseas due to the high interest rates at present in the UK, they may not have considered the changes in French providers' products.

Francois Drouin, chairman of Credit Foncier de France, explained: "Overseas buyers now make up a significant part of the French property market and are keen to take advantage of French financing options.

"Our customers want to make the most of their property investment and protect themselves against currency risk."

However, foreign exchange specialist HiFX warn that agreeing terms with a French provider is not always as straightforward as at home. If consumers are not aware of the bank charges in the small print, they may well negate the money saved by negotiating a good value mortgage.

Mark Bodega, director at HiFX, said: "More and more Brits are attracted to the cheaper rates offered by French Euro mortgages. However, most people completely forget to take into account the transfer charges levied by their bank and the currency risk associated with transferring money abroad.

"To make the most of good French mortgage deals Brits need to consider how they are going to transfer money abroad to meet the repayments."

French property investors will welcome the news that the economic climate appears to be improving over the channel in the run up to the French presidential election.

The unemployment rate fell one percentage point in December so that it now stands at 8.6 per cent. Although this is high in comparison to the UK, it is a notable improvement in an economy that has historically suffered from high unemployment.

In December the French also received a boost to their economy when the Organisation of Economic Co-operation and Development (OECD) revised it GDP prediction to 2.2 per cent for 2007, accelerating to 2.3 per the following year.

Its report said: "The French economy is likely to recover and continue growing slightly faster than potential over the forecast period.

"Sustained by firmer activity, employment growth should gain strength, and the fall in unemployment should continue, albeit at a slower pace than in 2006."

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