France's zero-interest mortgage program, known as Prêt à Taux Zéro (PTZ), is becoming a rapidly growing fiscal burden. The government expanded eligibility nationwide last year and is now pushing additional support for households with young children, even as a widening budget deficit forces austerity and fuels debate over the rising cost of the tax breaks.
Tax credits tied to the PTZ are estimated at 903 million euros (about 1.34 trillion won) this year, according to the government's 2027 assessment report on tax expenditures. That is up 29.6% from 697 million euros last year. The figure is projected to climb to 1.209 billion euros (about 1.79 trillion won) next year, a jump of roughly 73.5% in two years.
The PTZ, introduced in 1995, helps low- and middle-income households buy a home. The government provides banks with tax credits over five years to cover the interest they forgo. The loans carry an annual rate of 0% and a maturity of up to 25 years. Used alongside a conventional mortgage, the PTZ can cover up to 50% of the recognized purchase cost of a newly built apartment, capped at 180,000 euros. The average loan size in the fourth quarter of last year was 56,803 euros (about 84.4 million won).
Starting in April last year, the government extended the program beyond newly built apartments in major cities to include smaller provincial cities and newly built detached houses. The number of PTZ loans rose about 64% to 72,906 last year from 44,466 in 2024, and is expected to reach 82,900 this year.
The government is seeking to widen eligibility further. The 2027 budget bill submitted on the 1st would allow households that are expecting a child or have a child under the age of 3 to take out a second PTZ. On the 8th, the lower house finance committee approved an amendment extending that to households with a child under 5 and allowing loans of up to 100,000 euros with no income limit. The measure still requires passage by the full chamber. Under the government's original plan, the additional tax credits for new loans granted in 2027 are estimated at 466 million euros (about 690 billion won) over the next six years.
Tax credits to be provided over the next five years for PTZ loans issued this year are projected at 2.08 billion euros, close to the 2.1 billion euro statutory ceiling that applies to each year's new lending. The government's 2027 budget bill would scrap that ceiling altogether.
Some French lawmakers have raised concerns about the fiscal cost. According to LCP, the French parliamentary channel, Guillaume Kasbarian of the Ensemble pour la République (EPR) said the PTZ carries no interest for borrowers but is not free for taxpayers, questioning whether covering the interest of every household in every region out of public finances is the right solution. Eric Coquerel of La France Insoumise (LFI) said expanding loan support could push home prices higher.
France's fiscal position is also deteriorating. The country's general government debt is expected to reach 118.5% of gross domestic product this year, according to the International Monetary Fund's October outlook, far above the 47.3% projected for South Korea. France has also seen continued social conflict over austerity measures and cuts to public service budgets aimed at restoring fiscal health.
Yeom Myung-bae, professor emeritus of economics at Chungnam National University, said France's current fiscal strain stems from a pattern common across Europe, in which welfare spending — pensions in particular — consumes so much fiscal capacity that government efforts to spur growth fall short, leaving public infrastructure weak. "Supporting vulnerable groups is of course something that must be done, but for fiscal sustainability, three principles must be observed: support should be temporary, timely and selective," the professor said.
The French case carries lessons for South Korea, where proposals such as a "basic loan" offering low-rate credit to borrowers with weak credit profiles are under discussion. Seo Ji-yong, a professor of business administration at Sangmyung University, said the PTZ applies income requirements and bank underwriting, and therefore does not extend to borrowers who lack the capacity to repay. "The lesson this program offers Korea is that support should have a clear purpose and a clear target, rather than being universally interest-free," the professor said. "Aid should focus on first-time buyers and people buying a home to live in, while also screening for repayment capacity."
Oh Jung-keun, chair professor at the aSSIST University, said interest-free loans would improve borrowers' access to credit but have likely become an enormous burden on French public finances, where the debt ratio is approaching 120%. "There is talk in some quarters here about 'basic finance,' and this French case should serve as a cautionary example," the professor said.