Country Profile

In 2018, France’s home ownership rate stood at 57.7 percent nationwide, of which 35 percent had a mortgage. The home ownership rate was 56.7 percent nationwide. The home ownership rate is lower than most other developed nations, partly due to France’s strong social rental sector, which housed 17 percent of urban households in 2018. 

France’s residential debt to GDP ratio was 46 percent in 2018. The French mortgage market is now exclusively driven by commercial banks, led by the two main cooperative banks, Credit Agricole and BPCE. Most loans are originated at a fixed rate for a 1%- to 25-year term. The government supports several subsidies that are administered by an organization called SGFGAS (Société de Gestion du Fonds de Garantie de l’Accession Sociale), whose basic mission is to guarantee mortgages to lower-income households. SGFGAS was created in 1992 as a privately held company that has credit institutions (including high-street banks and mutual banks) as its shareholders. The French government owns none of its capital, but can veto any of the organization’s financial decisions. The different programs administered by SGFGAS include:

- The PAS “Social Ownership Access Mortgage” guarantee: Operational since 1993, PAS is a mortgage scheme reserved for households with modest incomes that are sufficiently solvent to buy a property. PAS mortgage holders are required to adhere to familial and regional scales of maximum income, and benefit from lower origination costs. All PAS mortgages must be covered by a FGAS guarantee, which is a self-insurance by participating banks. If the mortgagor defaults, FGAS will pay the respective credit institution the necessary sum to cover the default.

- 0 percent mortgages: Since 1995, certain qualifying lower-income mortgagors can borrow at a zero interest rate for new houses or substantial renovations of an existing house. The FGAS guarantee is extended to mortgagors under this scheme who comply with the PAS income limits. Since 2005, credit institutions receive a tax credit in lieu of the interest income for such mortgages, whereas previously they received a cash subsidy. SGFGAS administers the 0 percent mortgage.

- 0 percent Eco-mortgages:
Since 2009, the government provides an interest-free loan of up to €30,000 for energy efficiency improvements to pre-1990 properties. The loan is available for both owner-occupied and rental properties. 

Housing Savings Schemes: Since January 1, 2014, the regulatory and statistical monitoring as well as the control of operations relating to the housing savings scheme have been entrusted to SGFGAS.

SGFGAS has an automated information exchange with the credit institutions, and is able to manage all its operations with a permanent staff of 30 people, despite a growing volume of mortgages. SGFGAS also provides technical assistance to local authorities wishing to participate in home ownership schemes.

France is unusual in that it does not have credit bureaus (based on the protection of people’s privacy). However, there are very few defaults, due to a severe upstream selection of borrowers, as evidenced by a 1.3 percent level of doubtful loans (loans that are more than three months overdue) in 2018. France has not pursued the development of an RMBS market.

About the Editor

Claude Taffin

Claude Taffin is a housing finance specialist that has previously served as a Director at Credit Foncier de France, Director at Social Union of the Habitat, and as a Senior Specialist at the World Bank.