Mortgages granted to low-income first-time homeowners will increase from €80,000 to €100,000 in 2024. The eligibility criteria for the fiscal measure will also be broadened, in an effort to help more people get on the property ladder.
France’s 0% interest rate loans for low-income families will be increased and extended to more people next year, French economy minister Bruno Le Maire announced on Wednesday.
The government had originally planned to scrap the fiscal aid designed to help first-time home buyers, but instead, it’s putting an extra €850 million on the table.
“There used to be €20 billion loans granted monthly, we’re down to €10 billion,” Le Maire said on French radio channel RTL, blaming inflation and interest rates increases.
The French economy ministry estimates mortgage interest rates average 4.4%.
Launched in 1995, the measure allows its beneficiaries to get on mortgage repayment plans of up to 25 years, which they don’t need to start paying back until five years after purchasing their home.
Aspiring homeowners need to meet several conditions to benefit from the initiative, including buying a house or unit outside large cities that match energy-efficient criteria if the property isn’t a new build.
That will change from next year: the loans won't be granted to build a home, as soil artificialisation is not deemed beneficial for the environment.
Starting in 2024, the loans will be available in 210 extra cities across France, and the revenue criteria widened so more people can benefit from it. “That’s an extra 6 million potential beneficiaries,” said the French economy minister.
Le Maire has not yet specified the new income-based criteria for next year. The current limit to benefit from the aid is an annual salary of €27,000 for a single buyer, or up to €54,000 combined income for a family of four.
The 0% interest rate mortgages currently in place have an €80,000 cap, which will be extended to €100,000 next year.
The condition that the property can’t be bought entirely with the state-sponsored loan will remain. However, the loan’s proportion compared to a classic bank-approved mortgage necessary to complete the home purchase will rise from 40% to 50%.