Base rate on hold

Expats with a mortgage in the UK will be pleased with this news.

The Bank of England has kept its base rate on hold, but a May rise is still widely predicted

The Bank of England’s Monetary Policy Committee (MPC) has voted by a majority of 7-2 to maintain Bank Rate at 0.5%.

Following an increase from 0.25% in November 2017, the Bank Rate has been held at its current 0.5%.

But it may not stay that way for long – with many experts predicting an increase in interest rates in May.

The Bank’s own report admitted that an ongoing tightening of monetary policy over the forecast period will be appropriate to return inflation sustainably to its target. Inflation is currently 2.7%, against a 2% target.

The MPC added that “all members agree that any future increases in Bank Rate are likely to be at a gradual pace and to a limited extent”.

How this may affect borrowers

If the Bank of England does hike rates in the coming months, expat borrowers could see their monthly mortgage repayments rise.

The Bank of England may have opted to sit tight now, but it’s likely that they’ll lift rates in the next couple of months. This would impact all consumers, but particularly homeowners who’ll see mortgage rates rise to their highest level in a decade.

Good advice for expats

If you have a mortgage on a property in the UK it would be sound advice to get it reviewed as soon as possible. If all the predictions are correct switching to a fixed deal if you have no redemption penalties could save you a lot of money in the future.

Can we help?

If you are looking for a new or wish to review your current mortgage, please do make contact and one of our advisers will be happy to assist.

Expats going for the longer term  

Expat buyers and re-mortgagers are fixing their mortgage deals for longer as the threat of interest rate increases loom.

The number of applications received for 3-5-year fixes from first-time expats buyers has more than doubled year-on-year, with 51% of all expat first-time buyer applications being for longer term deals.

Re-mortgage deals are also being fixed for the longer term although 2 years fixes are still very popular. The overall trend of the expat seems to be to secure a decent rate for the foreseeable future. Tracker deals currently are generally not so popular, but this must be expected with interest rate increases promised.

More and more expat first-time buyers are getting their foot on the property ladder in the UK than ever before, this is likely to be prompted by the Brexit situation and the uncertainty it brings.

What is very surprising is the expat first-time buyer is putting down a larger deposit than ever before showing an increase of 20% in 2017 and this trend is carrying on into 2018.

Data shows that first-time expat homeowners are making very wise decisions about the type of home loan they choose, such as opting for longer terms, which reflects the sound advice brokers are likely giving to their clients.

Role of the UK broker

More expats are turning to a broker, perhaps because choosing a mortgage is one of the biggest challenges they will face whilst residing overseas. The growth in intermediary share of lending over the past five years has risen from 53% in 2012 to 77% in 2017, this clearly demonstrates the value borrowers place on the role of a broker.

Help required?

If you are an expat looking for a new or re-mortgage, please do get in touch and one of our advisers will be happy to assist.

More expats choosing broker assistance for mortgages

The number of expat mortgages coming through brokers has risen steeply over the last 2 years, this figure now stands at 71% from 64% last year.

There has been a steady increase in mortgages sold by intermediaries to expat buyers and re-mortgagers as the market remains very buoyant indeed.

Need for help

Brokers believe the increase in regulation and complexities of the market are the driving factors. Affordability calculations and lender criteria have become harder for consumers to understand.

It is not surprising that more and more clients are choosing to obtain their mortgage via an intermediary as lenders require more detail than ever before. This is not to say it is more difficult to obtain an expat mortgage just far more complex. For the majority of expat clients who reside abroad communicating with a lender in the UK can be very time consuming and confusing.

Expats seem to value a personal service which is often missing from the high street banks email service, this is particularly the case with expats re-mortgaging.

Buying a home in the UK is a challenging task if done from afar so making the mortgage application as pain free as possible is obviously a huge advantage for the expat.

It’s very clear that expats appreciate the value of a broker who can guide them through the process and provide quality advice on the best options available to them.

Independent broker benefits

  • Full range of mortgage choices
  • Industry qualified advisers
  • UK based for easy communication
  • Fully automated service
  • Faster completion

Assistance required

If you would like help with your new or re-mortgage, please make contact and one of our advisers will be happy to help.

Time to check your mortgage

Mark Carney has put the country on notice – the cost of borrowing is going to rise more rapidly than the Bank of England indicated only three months ago.

Savings wise, this for some could be good news. Interest rates need to go up more quickly than expected because the Bank expects the economy to grow more strongly than expected this year.

Unemployment is at its lowest for 43 years and, finally, wages are starting to pick up – as one would expect when the jobless rate is so low. That’s the good news for the UK.

The market was putting the chances of an interest rate rise in May at 50/50 even before the Bank’s inflation report, but now sees the chance of a rate rise that month as more probable than that, while a rate rise in August – a month after Mr Carney celebrates his fifth anniversary of becoming governor – is seen as a done deal.

Even a rise from 0.5% to 0.75% will feed through into higher mortgage rates. Swap rates, which mortgage lenders use to price their fixed-rate home loans, have already been rising with, for example, the two-year rate more than doubling during the last 18 months.

So, expats whose fixed rate home loan is up for renewal before August should be looking right now to lock in the current rates. Likewise, expat mortgage borrowers on a variable rate deal might also want to think about moving to a fixed rate deal.

The UK has just gone through a period, lasting nearly nine years, during which interest rates were held at record low levels.

They were kept at those levels because the Bank of England’s policy-makers were more frightened about deflation than inflation.

Review your mortgage deal if:

  • Fixed rate is ending shortly
  • Your current mortgage is on a standard variable rate
  • You wish to raise capital

Can we help?

If you would like some assistance please make contact and one of our advisers will be happy to help.