When it comes to bubbles and France, Champagne comes to mind. But runaway mortgage lending by French banks has raised the prospect of a bubble of the real-estate kind.

Home prices rose an average of nearly 9% in 2010 and climbed 18% in Paris. Fixed-rate mortgage lending jumped 73% in February from a year earlier, to €149.9bn ($213.2bn), prompting the Bank of France to warn banks to rein in their lending.