Is Mortgage Portability a Good Idea?

The real estate market is currently in crisis, with a 40% decline in mortgage lending and a 22% drop in the number of home sales in 2023. To address this, the National Real Estate Federation (Fnaim) is proposing to make the transferability and portability of mortgages standard practice.

Portability would allow homeowners who wish to purchase a new property to reuse the loan they took out when buying their current home, rather than having to pay off their original loan before taking out a new one. This way, they could continue to benefit from loans at rates below 2 percent, which were very common before 2022. If their new property were more expensive than the first one, they could take out a supplemental loan at current rates, which are around 4%.

The FNAIM also hopes that the government will allow the transferability of loans, which would enable a seller to transfer their existing loan to the buyer of their property, potentially at a more favorable interest rate. This measure would benefit first-time homebuyers, who are being penalized by rising interest rates.

However, these measures have been criticized by banks, which fear significant revenue losses, especially as their costs have risen due to higher key interest rates. Furthermore, from a regulatory standpoint, these measures appear difficult to implement, particularly because of the eligibility criteria for contractors seeking credit and the inability to transfer credit insurance between a seller and a buyer.