Interest rate fears in the mortgage market, expats be aware

Brexit, a hefty COVID bill, inflation, and the rising cost of energy, are just a few of the factors causing the price of everything to go up. So it is understandable that there’s a marked level of fear among homeowners at a rise to interest rates. Is it justified? In my opinion, no.

Firstly, interest rates have been at historic lows for the past decade so many newer homeowners won’t have any experience of higher rates. Homeowners who saw interest rates of almost 15% at the end of the 1980s are likely to be less concerned by the rise of 3.5% predicted in the coming years.

Secondly, their rock-bottom lows always meant that the only direction for them to travel was up, and this would have happened regardless of global factors. Lastly, and most importantly, lenders stress test interest rate factors in great detail before approving mortgages – eager to avoid the housing crash that befell many back in 2008.

To reiterate, the fear around a rise to mortgages is understandable, as it will sit alongside a rise to the cost of food, fuel, travel, and just about anything else. Subsequently, we will see a period of adjustment where homeowners will need to look carefully at their spending and factor in how much a rise in their mortgage will affect them. Of course, it is important to note that these worries are also dependent on what type of mortgage you have.

Variable vs fixed-rate mortgages

If you have a expat fixed-rate mortgage, there’s even less reason to be concerned right now as the rise in interest rates won’t affect how much you’ll repay. This will only become a factor when you re-mortgage or look for a new one as it may affect how much you can borrow.

There’s understandably more concern for those on variable rate mortgages who will see a rise in line with interest rates, however, these scenarios will have been stress tested by brokers who would lend based on how an interest rate rise will affect someone’s ability to repay.

Let’s not forget that those on a variable rate have enjoyed low-interest levels for some time and will know the pros and cons of their choice, particularly as a big benefit is there being no early redemption fees if you want to get out of your mortgage early.


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Getting a expat mortgage – this will help!

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 2016 but seems to be making a recovery since the UK’s exit from the EU.

As an expat is it difficult to get a mortgage on a UK property?


There are a number of items to take into consideration when looking at expat mortgages. 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.

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


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Expats – Great long-term investment

The average house price climbed to a new record high of £276,759 at the start of the year, despite growth slowing compared to previous months, according to the latest Halifax house price index.

House price growth fell to an increase of just 0.3% in January, the lowest rise since June 2021, while growth remained steady on an annual basis at 9.7%.

Transaction levels rebounded to those seen before the pandemic, and overall, prices were up £24,500 compared to this time last year. They were £37,000 higher than in 2019.

Following the peak activity of 2021, transaction volumes are returning to more normal levels. Affordability remains at historically low levels as house price rises continue to outstrip earnings growth.

Despite record levels of first-time buyers stepping onto the ladder last year, younger generations still face significant barriers to home ownership as deposit requirements remain challenging.

Any predictions that house prices were going to start to pull back once the stamp duty holiday was no longer in play have been proved very wrong.

However, the Halifax house price index released today shows that significant house price rises are starting to slow with only a 0.3% month on month rise, which is the lowest since June 2021. While forecasts of a housing price reduction have not yet fully materialised, it seems inevitable that there will be some sort of slowdown in the coming year

London’s property market has continued to see record numbers of buyers throughout January. A strong indication that the market will remain at high activity levels in the first half of this year.

Whilst larger properties or homes with outside space remain sought-after, apartments in some of London’s more central boroughs are experiencing a steady comeback. This is particularly driven by professionals who are returning to the office and are seeking a home nearby.


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Expat mortgage business is still growing fast

January 2022 has seen more expat mortgage business being conducted than this time last year.

New applications for first time and re-mortgage business are also high for the time of year indicating expats still have faith in the UK property market.

Mortgage rates are very affordable which is fuelling the increase in business being done in all sectors of the mortgage market. However, experts are predicting rises in rates are on their way.

January has seen a record number of expat re-mortgages as clients look to release equity built up over the years within their properties. The released equity is being used for various reasons including debt consolidation and funding their children’s education and house deposits.

Expats are also re-mortgaging to fix the rate of their loan for the longer term.

Confidence is high within the European expat community at present especially with those who own a property in the UK.

If you are considering taking out an expat mortgage or re-mortgaging, please call us and one of our advisers will be happy to assist.

UK property prices still increasing

According to the latest figures house prices are still on the rise, January and February saw an average 2.7% increase as the UK economy continues to strengthen.

It is expected that house price increases will level out as the year goes on with a steady and reliable growth rate, again spelling good news all round.

At present the outlook for 2022 is very positive within the UK property market, the signs are this will continue for the foreseeable future.


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Expats are taking advantage of the independent broker more and more

Expats are now using an independent broker more than ever before to secure their deals whether it be a new or re-mortgage. The survey showed using a broker will reduce completion times, they are fully versed in the expat mortgage process and able to react to the lenders requirements much quicker.

Why should you look for an independent?

Very simple you will have a much bigger choice of deals as an independent is not tied to any one company.

2021 has seen a large increase of approved mortgage applications compared to the same period last year. These increases show how restrictions are being eased by lenders as they compete for every single bit of business. This coupled with record low interest rates is indeed good news for the expat borrower.

Lenders are still holding interest rates steady as the prospect of the Bank of England raising rates has receded slightly.

All this positive news is giving the borrower confidence in the longer term, what happens after the Brexit negotiations are complete remains to be seen.

Expat mortgages are now easier and quicker to complete

The time it takes to complete a new or re-mortgage for expat’s has reduced significantly in the last 2 years.

The industry is seeing a new application in a straightforward case complete in a matter of weeks rather than months. A straightforward re-mortgage is now on average completing in less the 6 weeks which is significantly quicker than this time last year.

Like to know more?

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