Expats should take heart

Expats should take heart

The direct and indirect impact of COVID-19 has affected the performance of different sectors and financial markets in different ways. The world’s major indices have suffered considerable losses – recently, it was reported that The Dow Jones Industrial Average crashed by almost 32%.

Other financial assets have so far proven resilient, such as UK real estate

The ‘Boris bounce’

House prices are typically used as an indicator of capital growth for real estate. In 2019, the political deadlock over Brexit resulted in significant market uncertainty and modest house price growth. Some commentators feared house prices would drop significantly as a consequence of Brexit – however unlikely such events actually were.

Boris Johnson’s victory in the 2020 General Election and his subsequent ability to pass the EU Withdrawal Bill through parliament resulted in surging investor interest in residential real estate. House Price Indexes for March 2020 provided evidence to this affect.

Both Halifax and Nationwide recorded that average residential property prices that month were 3% higher than they were the year prior.

With Brexit uncertainty forgotten, sellers were again eager to place their properties on the market. Coupled with the government’s growing excitement about ushering their new ‘housebuilding revolution’, it seemed that the UK was finally ready to confront the ongoing housing crisis and match the growing demand for housing with the adequate level of supply; generating strong increases market activity and a return of strong value returns all-round.

COVID-19 has put a pause on transactions

Lockdown measures imposed by the government in a bid to contain the COVID-19 outbreak has had a significant impact on the real estate market.

For the moment, the government is actively discouraging people from buying and selling properties, and some lenders have reacted to this news by deciding not to take on new enquiries.

However, I believe the momentum around the post ‘Boris Bounce’-market has not disappeared. In fact, in lieu of transactions being available, pent-up demand is likely to further exacerbate market activity once the pandemic is over.

Ultimately, it can be said that COVID-19 has, in a sense, taken the place of Brexit uncertainty in artificially supressing market activity and, thus, property price growth.

This means that once the virus is contained there is no reason to suggest why the property market will not make a quick recovery.

Expats should not hold back

There is no doubt the developments in the expat mortgage market in response to the coronavirus crisis are moving at a frenetic pace. Helping clients is crucial for everyone in the industry currently, keeping on top of all of these updates to help navigate the best options for individuals is very important at this time.

Although you may have seen some press articles on the number of mortgage products decreasing from the market, re-mortgage products are still freely available.

As such, this period represents a great opportunity for expat UK homeowners to save money on their mortgage with some of the great low rates currently available.

If your current mortgage rate is coming to an end, despite this Covid-19 scenario the lender would still hike your rate up to their standard variable if you do not look into your re-mortgage options. There are some great mortgage deals being offered by lenders currently.

You may have seen some press reporting that surveyors are not considered ‘key workers’ and hence are not allowed to go out to visit and value properties (i.e. a “physical valuation”). Therefore naturally, you may be concerned about whether you can apply for a re-mortgage during this time. We have been in continual discussions with lenders and the good news is that more and more lenders are now able to do some valuations for re-mortgages without the need for a home visit, using market data and knowledge of the location to estimate the value. An intermediary can help guide you on what lenders offer these types of valuations.

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.

Coronavirus – Expats are asking, can I still apply for a mortgage?

Definitely yes! One big difference between the challenges of 2020 and the economic turbulence of 2008’s credit crunch is that there is no issue with the liquidity for banks and building societies.

They have the means and the willingness to lend. However, what we are seeing are disparities with how each lender responds to the current situation.

Some lenders have been impacted from a service perspective more than others due to staff shortages.

We are seeing these lenders have to withdraw some mortgage products, or to cap loan to values (the percentage of the property value they will lend as a mortgage against the property) to limit and manage the amount of business they attract, in order to give themselves breathing space.

For example, in recent days some major lenders have temporarily introduced a maximum loan to value of 60% whilst they manage service levels.

What about a valuation?

Physical valuations have been put on hold during this period of self-isolation. This means that valuations are currently deferred for an initial period of around four weeks.

However, this does not mean you should hold off applying for your mortgage. By submitting the application you are locking in the mortgage rate offered with most lenders, which with current fluctuations is worthwhile to secure a low rate on your mortgage.

You can also get the majority of the paperwork and processing done, so that just the valuation will be required.

Also, some lenders will look to do a valuation on a desktop, or automated basis using data and knowledge of the location.

Where these are applicable, and on re-mortgages these are quite common, applications are processing to mortgage offer as normal. A broker can help guide you on which lenders offer these types of valuations.

Need assistance?

Our professional independent advisers are used to dealing with all types mortgages, they have vast experience in the expat mortgage market.

 

Experts are predicting interest rate increases

There is a lot of evidence to suggest interest rates are going to be rising sooner rather than later. Facts are a sizable number of expats have already transferred to a fixed rate mortgage deal; we have seen a significant increase in re-mortgaging since the turn of the year.

Base rates may well be on hold at present and mortgage rates are at the lowest they have been for many years. One thing is for sure if the bank base rate rises then mortgage interest rates will very soon follow suit.

A recent survey of expats showed that if this happens over 45% are not prepared for the increase in expenditure. The survey also revealed the majority of people have taken for granted the current low interest rates and that they will remain for a good many years to come. This may well be a very dangerous attitude to adopt as things can change very quickly in the world of finance.

It is widely expected in financial circles that interest rates will start to increase in the not too distant future, keeping this in mind if you are an expat with a mortgage it would be very wise to review it as soon as possible.

The future

With all the above considered it could be a very good time to look more closely at your current mortgage deal. By acting now you could save a great deal of money now and in the future.

Every expat has unique needs and objectives but one thing we all have in common is saving money. If your current mortgage deal has no exit penalty or is coming to the end of its deal period, you may wish to look at a fixed rate deal. There are currently some very advantages rates on offer so now could be a very good time to act.

Can we help?

If you require assistance or would like to talk over your current mortgage, please do call one of our fully qualified advisers and we will be pleased to assist.