Bank of France publishes CCSF report backing French residential mortgage model and warning on CRR3

The Bank of France published a notice that the Consultative Committee for the Financial Sector, or CCSF, has submitted to the economy minister a report and accompanying recommendation on France's model for financing the purchase of a main residence. The committee reaffirmed its support for the French residential mortgage model, saying its reliance on long-term fixed-rate amortizing loans, borrower insurance and mutual guarantees, and strict lending rules including a usury cap and a primary focus on household repayment capacity has kept repayment burdens stable and defaults very low. Fixed-rate amortizing loans account for 99 percent of mortgage origination and outstandings, according to the report. The CCSF warned that parts of the revised European prudential framework under Capital Requirements Regulation 3, or CRR3, could threaten the stability and durability of the model and called for EU rules proportionate to the actual risks of residential mortgages. It concluded that mortgage portability and transferability are not viable broad solutions because they would complicate lenders' credit management, raise funding costs and could undermine long-term fixed-rate lending, without clear operational benefits for borrowers. Bullet loans were also judged unsuitable for broad use because they carry higher costs and risks for households and remain marginal in France and most of Europe. Alternative homeownership arrangements, including emphyteutic leases, rent-to-own, co-investment and bail réel solidaire schemes, were described as useful but limited segments that require clear legal safeguards and transparent pre-contractual consumer information because they can involve partial or temporary ownership, resale constraints, specific fees or income conditions.