Expats are looking for more long-term stability

More expats with mortgages on UK properties are looking to lock in a longer fixed deal than ever before. Experts believe this situation has been brought about due to the Brexit uncertainty and what could happen to the mortgage market in the immediate future.

Popularity of longer-term deals had waned at the start of 2020 with expat borrowers opting to fix their mortgage for two years, according to the latest figures.

In the later part of last year demand for five-year fixed-rate re-mortgages went up 32%, representing half the market according to the report.

Lenders are eager to attract longer-term business which has created a competitive landscape for expats. This has ensured five-year average rates have remained relatively flat month-on-month.

Five-year fixed deals tend to be more popular amongst borrowers who are seeking stability. Expats will be opting for these deals to provide some certainty amid the potential economic and political upheavals in the next few years due to Brexit and now Coid-19

Currently over 71% of expats re-mortgaging expect a rise in the Bank of England (BoE) base rate this year. This compares to 35% in April 2020.

After hints of a rate increase earlier in the year, sluggish economic growth discouraged the BoE from raising the base rate. Yet more than three quarters of borrowers still believe another base rate increase will happen at some point in the next twelve months.

Independent brokers

It also emerged the number of expat borrowers using an independent broker to re-mortgage has also hit a record high in December/January.

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Expats want to hold onto UK property and increase if possible

Expats are in ever increasing numbers trying to either get on the ladder or increase their current UK holding. The majority of expats see property in the UK as a “pension fund or long-term investment” or a way of laying financial security for the future.

Bricks and mortar have always been a national obsession. The wisdom that property is fundamentally an exceptionally good long-term investment has been passed down from generation to generation.

Expat mortgage applications are currently at an all-time high and the outlook for 2021 remains incredibly positive. It would seem that the high property prices do not deter the investor.

According to recently released figures the UK property market has been the best performing in the whole of Western Europe. It is therefore not surprising that so many people want to invest in an ever-shrinking market.

Is it a good time to buy in the UK?

The very quick and simple answer is most certainly YES, if you have the funds for a deposit now would seem the right time to buy. The affordable properties that are available to purchase seem to be diminishing on an annual basis, which without doubt will mean higher prices to pay in the future.

Leaving the EU.

This is the one only unknown area that could affect the property market, if all the experts are correct it is unlikely to have any lasting long-term damage.

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If you require help with your current or new mortgage please call one of our experienced advisers who will be happy to assist.

Expats who have UK property did reap rewards

2020 proved to be a very strange year indeed with the pandemic capturing the headlines every day and the economic consequences of the lockdowns impinging on every aspect of daily life.

However following an initial hiatus in the Spring the housing market bounced back strongly – and somewhat surprisingly – as evidenced by the statistics provided by some agents, lenders, and the Land Registry.

It is worth taking a closer look at some of these statistics and what they might tell us about government policies in relation to the housing market and mortgage lending.

For example, it seems likely that in most parts of the country any savings purchasers made as a consequence of the Stamp Duty holiday were wiped out by the increased price they had to pay for the house.

Sources

The Land Registry recorded a 7.6% increase in average house prices (with all these statistics ‘houses’ include flats) with the average property price for the UK reaching £249,633 in November.

The Land Registry uses completed sales transactions so there is a time lag before its statistics are updated. The Nationwide index rose 7.3% to £230,920 in December. The Halifax index finished the year 6% up at £253,374.

The future.

So what has been going on? Conventional wisdom would suggest that in a period of economic uncertainly, rising unemployment, and eye-watering levels of government borrowing we would see a fall in property prices or at the very least a much-subdued market.

The Land Registry statistics are based on all completed sales many of which are cash sales that do not involve a mortgage.

The Halifax and Nationwide statistics are based only on transactions involving a mortgage. Typically about a third of sales are for cash and this proportion is even higher in retirement areas.

The Nationwide index is statistically weighted to compensate for this so we have the Land Registry said prices have risen 7.6% and Nationwide closely shadowing this saying 7.3%.

Halifax is much lower at 6% although the Halifax average price is higher than Nationwide’s.  What they all agree is that 2020 saw a significant increase in house prices.

Interest rates

The main factor driving the housing market is the current historically low level of interest rates and the fact that mortgage lenders were able to continue to support the market by lending throughout the pandemic.

These low interest rates will not last forever, but they do currently bolster affordability and borrowers who are fearful of an interest rate hike can currently opt for a fixed rate extending some years into the future.