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.


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.


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.


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.


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.

Expats should read this now!

New year = saving money

Expats with mortgage deals due to expire or who are on their lender’s default rate could save over £2,500 by switching to a fixed product.

That is according to recent report which is encouraging people to re-mortgage. The research found moving from the lender’s Standard Variable Rate (SVR) could save borrowers more than £2,000 in just one year.

This is because, term and do not re-mortgage they automatically default to the SVR which is usually far more expensive. Indeed, if the Bank of England, as is being widely predicted, increases interest rates later this year, it is likely some lenders may also increase their SVR further. With this in mind expat borrowers whose deals are ending or have lapsed to the SVR could benefit from switching to a new fixed-rate deal.

Figures show expats could save £5000 over two years and £7,530 over three years by re-mortgaging to a more advantageous deal.

Is it time to review your mortgage deal?

Mortgage rates are unlikely to improve in the near future so now is the ideal time for borrowers to secure a fixed-rate deal on their mortgage. Borrowers who are on an SVR or coming to the end of their term have the potential to save themselves thousands of pounds on their mortgage, which could easily pay for home improvements or that much longed-for family holiday.

The near all-time low rates will not last forever, the wise expat should look to secure a deal and speak to a broker straight away.

Not only can brokers offer a far wider range of products and options for consumers which they may otherwise not have access to, or the time to find, but their invaluable expertise will be able to help you secure a great deal on your mortgage.


Expats lending on an upward trend at the end of 2021

Last November’s gross mortgage lending to expats has increased by 4.8% from last month, this is the fourth month on the run. In addition to the month on month increases lending this year has increased 16.4% overall.

Experts believe these strong figures are down to the Brexit negotiations being concluded.

There is definitely less confidence in the property values of other European countries.

Property continues to gain value in the UK at a steady rate and looks like continuing for the foreseeable future unlike the rest of Europe.

One other factor that has contributed to this robust growth is the number of re-mortgages completed. Both expats and UK residents are living in the fear that interest rates are about to jump. These fears are justified as already a good many long-term fixed rate deals have been withdrawn from the market but there are still some very attractive deals on offer.

UK property offers stability

The UK property market without doubt still offers value for money if you own a property or can afford to buy one. Anybody who has owned a property in a good area of the UK over the last 10 years would have seen their investment grow substantially.

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 and beyond is very positive within the UK property market, the signs are this will continue for the foreseeable future.

To sum up – traditionally the UK property market has always offered excellent value long term investment potential and there is no reason to believe this won’t continue.

Mortgage advice?

If you need assistance with a new or re-mortgage, then please contact our expert independent advisers who are waiting to help.

Expats ask what will 2022 bring?


That’s the question on everyone’s lips at the moment. Reflecting on all that happened in 2021, it most certainly wasn’t the year we thought it would be.


Yes, some things seemed to move towards “normal” again, however with the recent rise of COVID cases, as a result of the new Omicron variant, it has proved once again that we don’t know what is waiting around the corner.


The specialist lending market has also experienced a great amount of uncertainty over the past year, however one area which has experienced sustained growth over the last 12 months is the high demand for Expat mortgages.


The increased demand for this particular product type, will undoubtedly continue into 2022, as the number of investors looking for projects where they can add value and see a quick return continues to grow.


With both homebuyers and renters seeking ‘turnkey’ properties that are designed for modern living, there is an opportunity to sell or rent these properties at a premium price.


With many investors and developers looking for opportunities to make a larger return on their investment, renovating a property can achieve this by adding significant value to a dwelling.

This is especially true at a time where well-maintained properties, designed to fit the work from home trend, are being snapped up, sometimes within hours of coming to the market.


Therefore, looking ahead, we can only see the demand for homes designed for this purpose and in turn finance options available to help achieve this, continue to grow.

Expats need to read as rates rise

So, last week it finally happened. After months of speculation the Bank of England put interest rates up to 0.5%.

It’s just a small tweak which may take a while to filter through to the mortgage-paying public but it’s enough to give many of us that unsettling feeling that, at some, point we may start paying more for our home loan.

As an Expat if you are currently on a fixed rate mortgage, you’ll be sheltered from any rises to the Bank of England (BoE) base rate until your deal ends. If you are locked into a five-year deal and are at the beginning then you’ll be safe for some time.

If, however, your fixed rate is due to finish in the next year you may be concerned about the potential for future rate rises. Indeed, the predictions suggest more interest rate increases may follow in the next couple of years.

For those on a variable rate deal – sometimes known as tracker mortgages – experts believe lenders will pass on the BoE’s rate hike in the next few months.

The same applies if you are on your lender’s standard variable rate (SVR) – which will be much higher than the average tracker rate. Research found borrowers on a SVR could see an additional £324.48 added to their mortgage annually following the base rate rise.

Whilst re-mortgaging before your deal ends means you may have to pay hefty exit charges (known as early repayment charges or ERCs), Expats are reminded borrowers you can arrange your new deal up to six months before your current one finishes.

Speak to a broker

Whether you are a first-time buyer, moving home or just trying to manage the repayments on your current deal it’s a good idea to speak to an independent adviser if you are looking for further information and access to a wide range of mortgages.

Expats are asking, is a UK property still a good investment in 2022?

All the papers have been full of doom and gloom stories in recent months heralding the death of buy-to-let and a falling housing market.

However, as they say “you shouldn’t believe everything you read in the newspapers” – the UK housing market is still a really safe and lucrative place to invest your hard-earned money. And especially if you are looking for a long-term investment, it’s a safer bet than the more volatile stock market.

Knowledge is key in your decision

Always when considering investing be sure of where your funds are coming from and that you have enough to pay deposits, legal fees and stamp duty. Maybe you already have property and are considering re-mortgaging to free up some equity?

The Bank of England base rate is currently very low and there are still some fantastic two, three, five and even 10-year fixed deals to be had.

One of the main ways banks set rates is based on how cheaply they can lay their hands on the money they lend out. This usually comes from savers or by borrowing on the money markets for a certain rate at a certain period, known as the swap rate.

Swap rates dropped last year because of global economic turbulence and Brexit but have since risen and there is a good chance mortgage rates will start to rise as a result. If you prefer the certainty of a fixed monthly repayment as opposed to a variable rate mortgage this could be for you.

Crucial to success, source a specialist expat independent mortgage broker to help you

As an expat investor you might find it tougher to get a mortgage because you don’t fit standard lending criteria.

A specialist broker will be able to search out lenders other than those on the high street and will know what criteria will fit best with your circumstances. As an example, many high street lenders will turn you down if you don’t have a UK credit history or aren’t on the electoral register. But a niche lender will have different criteria under which you could be eligible.

Can we help?

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