Coronavirus crisis: Will France allow homeowners to delay mortgage payments?

Coronavirus crisis: Will France allow homeowners to delay mortgage payments?
France's Economy Minister Bruno Le Maire has announced a €45 bn aid package to help the country's employees and businesses through the coronavirus crisis. Photo: AFP
Some countries are allowing homeowners payment breaks on their mortgages as part of their coronavirus crisis management. Here's what the situation is in France up to now.

With countries taking extreme restrictive measures on their inhabitants activities to slow down the spread of the coronavirus, many people are seeing their financial situation hit hard because they are unable to go to work.

France and other European countries have introduced economic measures to help their inhabitants cope with the new normal. 

In the UK, the government has introduced so-called “mortgage holidays” as one of its coronavirus crisis management measures. Mortgage payers who are having trouble keeping their payment deadlines should get a three month payment break to “get back on their feet,” the UK Chancellor announced last week.

Italian banks have done similar measures, suspending mortgages for some groups of the population for up to 18 months.

So what about France?

The French government has not announced any such measures yet but that doesn't mean things won't change in the days or weeks to come.

“In France, it's not really a topic right now,” a bank employee told Capital, one of France's main financial magazines.

The French Economy Minister Bruno Le Maire has warned that the country will be facing an economic recession this year and announced a €45 billion aid package to help businesses and employees.

This includes measures like unemployment benefits and financial help packages for small businesses and self employed. The minister has not mentioned mortgage holidays, however.

Francois Villeroy de Galhau, Director of the Bank of France, said in an interview with BFMTV on March 20th that mortgage holidays were out of the question.

“Households today are in a situation where their purchasing power is luckily preserved,” he said, referring to the government's reinforcing the “technical unemployment” status that employees who cannot work during the coronavirus lockdown may claim.

Those unable to go to work in France will still receive unemployment benefits to pay their mortgages, was the Director's argument.

READ ALSO: What financial aid France's self-employed are entitled to during the coronavirus crisis

However, the French Bank Federation (FBF) said it advises anyone who is finding it difficult to keep their monthly instalments to contact their bank and see if there is any leeway in their contract to suspend mortgage payments.

In normal times, people experiencing financial difficulties may ask their bank for a suspension of their monthly downpayment for a period of time or decrease the amount of instalments to make paying them back easier. However not all banks offer these options, so check with your bank what your contract says.

What is a mortgage?

A mortgage is a document you sign when you buy a home that gives the lender (the bank) the right to claim the property if you do not pay the loan back. A mortgage payment refers to the monthly instalments you pay the bank after taking a loan to buy a property.

For some households, monthly mortgage payments can be by far largest outgoing expense.

People finding themselves in a difficult financial situation following the restrictive coronavirus measures that have halted most countries’ financial activities will therefore get some breathing space, if not a complete relief.

It will take them longer to pay back the total mortgage, but they will not have to think about making instalments on time during the crisis.

Vocab

Mortgages – hypothèques / also sometimes referred to as crédit immobilier (property loan)

Mortgage holiday – échéances de prêt immobilier / suspension des hypothèques


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