What about the expat mortgage market and Brexit?

The market so far has been largely unmoved by Brexit. Lenders have continued to drop interest rates across the board since last summer which indicates a lack of concern currently. There seems to still be a large appetite for banks to lend. The rates are very competitive and there are still plenty of high loan-to-value mortgages available to consumers.

If anything is to bring this to halt then it would be the Bank of England base rate rising. If the bank were to raise rates from 0.25 per cent to 0.5 per cent, the impact would be greater than just a rise in mortgage repayment, because inevitably confidence will take a hit. Yet so far, there have not been any firm indications that this is the way the Bank of England wants things to go.

If you are an expat with a mortgaged property in the UK now is a great time to lock in a new deal for the next few years and make the most of the low rates on offer.

Expats re-mortgaging for value

Expat re-mortgaging levels have soared to an eight-year high in September as borrowers take advantage of lower monthly repayments the latest figures have revealed.

The value of re-mortgaging fell due to a drop in the average loan size, but with overall mortgage activity down it still accounted for two-fifths of total lending in September

Expat borrowing activity has been fuelled by the lower rates on offer, rates currently are the lowest they have been for the last 7 years.

Expats who have not reviewed their current mortgage deal recently would be well advised to do so as rates are expected to rise in the future.

Help required?

If you would like to review your current mortgage please do make contact and one of our fully experienced independent advisers will be happy to assist.

Expat rates tumble

Recent falls in expat mortgage interest rates plus the effect of a weak housing market in the UK look set to give expat house buyers a significant negotiating edge in the busy buying period when many expats return to the UK.

The availability of lower expat mortgage rates, whilst at the same time, many regions in the UK are reporting softer domestic housing demand and falling prices opens up opportunities for overseas buyers who are not affected by domestic UK economic pressures.

As the threat of an increase to UK Base Rate and with-it expat buy to let mortgage rates recedes, several lenders have begun to cut expat mortgage rates and reduce bank administration fees.  Variable rate loans are available for expat buy-to-let purchases at very competitive rates across the board.

Expat buyers remain concerned about possible mortgage interest rate rises; these may end up being far more modest when UK Base Rate does eventually increase. The period since the financial crisis has been one of abnormally low UK Base Rates, but equally unsustainably high bank margins, as banks have rebuilt their balance sheets. Before the 2008 financial crisis, many mortgage providers would typically aim for a margin of anything from 0.75% to 1.25% over UK Base when setting mortgage interest rates, but today, many lenders are still achieving nearly three times this level of mark up on loans. As and when UK Base rates do rise therefore, lenders will have the ability to trim margins, so the impact on borrowers can be softened.

British buyers overseas can be faced with a daunting task when trying to buy in the UK, as loans now have to meet strict affordability criteria, whilst many lenders will cherry pick the countries where they will lend to expat buyers. Using an established and experienced independent broker who will match buyers to lenders is important and will save time and money in the long term in such a complex and evolving market.

Can we help?

If you are looking for a new or re-mortgage please do make contact and one of our qualified independent advisers will be happy to assist.

Expats have good news as rates are held

The Bank of England has voted 7-2 to hold the base rate at 0.75% in the first split interest rate decision since June 2018.

MPC members Jonathan Haskel and Michael Saunders both voted to reduce the base rate to 0.5%.

The industry was not surprised by the decision to hold the rates.

Frances Haque, chief economist at Santander UK, said: “The decision to hold rates was widely expected, given the delay to the Brexit process and ahead of the general election due on 12 December.

“The economic data published so far for the third quarter of this year suggests the UK economy has returned to growth, although many of the fundamentals such as business investment and productivity remain weak.

“Given this, the MPC is clearly standing by its cautious approach.

“Unless there is a sudden downturn in the UK economy over the next few weeks, it’s unlikely we’ll see a change in rates this year with the MPC likely to wait until the outcome of the General Election is known.

“However, if Brexit is postponed again, continuing the uncertainty, the MPC may wish to act to bolster the economy.”

Alex Maddox, capital markets and digital director at Kensington Mortgages, added: “It’s not a great surprise to see that the Bank of England has kept the base rate on hold at 0.75%.

“Brexit extension after Brexit extension and now a December General Election mean that the bank is going to want to keep its powder dry.

“In the current environment, it would have been a very hawkish move to cut rates.

“While future decisions will very much depend on the nature and timing of Brexit, it now looks increasingly likely that a rate cut may happen in the new year to support the economy if Brexit is delayed again and this impacts businesses and investment.”

Help with your expat mortgage?

Please do make contact and one of our expert independent advisers will be pleased to assist.

What to expect in 2020

If all the experts are correct then house prices will rise between 2% & 4% across the UK in 2020, but due to the Brexit situation these figures could vary drastically. However, if we look at history and all the ups and downs the UK has suffered over the years gone by one thing you can always seem to rely on for profit is property. So, why should a little thing like Brexit change what has happened in the past!!

If these figures are achieved it follows the trend of this year, a recent report states increases in values could be stifled by the Brexit talks which is dependent on how they progress. Another factor that could possibly slow growth down is first time buyers being unable to get onto the property ladder.

If you are an expat with property in the UK compare this potential annual growth to what could be achieve from an investment in any high street bank and property still looks a very good bet indeed.

There is a great deal of uncertainty facing everybody in 2020 but as always the UK property market is expected to maintain a decent growth rate.

Property still in short supply

There has been and still is a shortage of supply which constrains activity in the housing market and levels of house building remain low. This is another major factor why all experts expect the property market to remain strong through the Brexit negotiations which spells good news for expat UK property owners.

New and re-mortgages

Expat mortgages can still be obtained with a good selection of products available. This is expected to remain constant for the coming year.

Need some help?

If you require any assistance with your new or existing mortgage please do contact one of our fully qualified independent advisers who will be happy to assist.

Expats using specialised broker more often than not

Expats using speExpatriates looking for a mortgage or re-mortgage on a property in the UK now have a wider choice of loans than years gone by, so it makes sense to select the best one to suit your needs.

About five million UK nationals live overseas, and many are keen to hold on to a home in the UK, or to invest in one to rent out. But the available mortgage options are quite restricted – and in most cases, you’ll need to get a specialist landlord mortgage.

It is possible to secure a standard residential home loan as an expat, but it’s tricky to arrange, lenders will want to see evidence that close family are living in the house. Since most expats work abroad and cannot live in two places, for the majority, a buy-to-let is the more appropriate solution.

You will typically need to seek out a specialist lender and this is where the expat broker can assist you in making the correct choice.

It can be a difficult process to secure a mortgage when clients are overseas, especially with the time difference and tighter lending criteria.

Another factor is the European Mortgage Credit Directive, introduced in 2016, which means individuals paid in a foreign currency now come under closer scrutiny when their loan applications are assessed. The underwriting process needs to take account of possible exchange-rate fluctuations, as well as looking at a borrower’s overall financial position.

What a broker will do for you

The broker will take control of the mortgage process, therefore relieving you of the stress and paperwork. They will be able to deal with the mortgage company suppling the loan and answer any queries they may have, saving you time and money.

Help required?

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

How to arrange an expat mortgage

If we put Brexit to one side for the moment, there are many expats originally from the UK looking to acquire property in their former homeland. The value of sterling has fallen since the 2016 referendum on the EU and even though it has made a short-term recovery, the real spending power of the euro and dollar has increased significantly. So realistically how hard is it to obtain an expat mortgage?

What you will need

There are a number of items to take into consideration when looking at expat mortgages not least a cash deposit. These include:

• Proof of income
• Using assets as security 
• Credit history
• Identification and address

Proof of income

If you are employed by an international company, with a footprint in the UK, this is probably the Holy Grail for lenders and borrowers. You will likely be paid in sterling, have a good track record and be able to prove your income. The situation can be different if you have your own company, you are self-employed, or you are paid in a foreign currency. Please do not despair all is not lost; this is where a professional independent broker can certainly help secure the correct mortgage for you.

Credit history

In many ways creating your own credit history in the UK is something you can begin well before you make an expat mortgage application. For many expats, in the far-flung countries of the world, there may not be a credit history system and even if there is, it may not be as accurate as its UK counterpart

Can we help?

As expat mortgage specialists we offer a much-valued service to our client so please make contact if we can assist you.