Expats, is it time to buy in the UK?

Prime Minister Boris Johnson insists Britain will leave the EU on 31 October, even if a deal has not been struck with the EU. However, Parliament has passed a law blocking the UK leaving the EU without a deal.

Howard Archer, chief economic adviser to the EY Item group, warns that if the UK leaves the EU without a deal on 31 October house prices could quickly drop by around 5%.

However should the UK leave the EU with a deal at the end of October – or early in 2020 – we believe reduced uncertainty and gradually improving economic activity as the year progresses could see house prices rise by around 2% over 2020.

Housing market activity – and possibly to a lesser extent prices – could be given a lift in 2020 if the government cuts Stamp Duty significantly in the Budget later this year.

UK house price growth is at its lowest since January as buyers and sellers remain cautious amid Brexit uncertainty.

House prices rose just 0.2% in September, according to data from the Nationwide House Price Index, the tenth month in a row in which annual price growth has been below 1%.

On a monthly basis, house price growth fell by 0.2%, taking the average UK house price to £215,352.

Mortgage choices

Expats have a selection of both new and re-mortgage products to choose from. Interest rates remain at present reasonable especially compared to a few years ago. Deals including tracker and fixed are readily available from a number of lenders.

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.

Expats should review their mortgage before Brexit.

A new report just released clearly shows the majority of expats need to review their current mortgage deal.

Figures show the majority of expats do not review their mortgages when a fixed rate or term deal expires. Good news is there are plenty of good deals still available to meet the majority of expat needs. 

Reasons to re-mortgage

  • To save money.
  • Fix repayments
  • Raise extra cash for a project you have planned.
  • Your current deal is ending soon

Reasons not to re-mortgage

  • You have a penalty on your current mortgage which makes it prohibitive.
  • You have had credit problems since taking out your current mortgage.
  • You currently have an advantageous rate which may be fixed.

More and more people are looking for ways to reduce their monthly outgoings, one of the biggest expenses most people have every month is the mortgage payment.  It may be a wise move to review your current mortgage to establish if it is still the best deal for you and you are not paying more than you need to. With Brexit looming nobody really knows what the outcome will be and any implications it may have on the mortgage market. If you are an expat with a mortgage which does not have penalties to change you may be very wise to see what fixed deals are on offer, better “safe than sorry” as they say.

This will not be the case for all expats, your current deal may well be very good, but it is most certainly worth checking it out.

Can we help?

If you would like to review your current mortgage or require a first-time deal please do make contact and one of our advisers will be happy to assist.

Brexit an expat benefit?

Brexit is causing many UK property investors to hold off purchase decisions, with the result that property prices are showing some of their slowest rises in years in many parts and in some prime areas such as London, even going backwards.

Brexit and Expats is something of a discussion. This decline in real values is now opening up real opportunities for expat buyers in the UK. Currency moves have served to magnify the real price drops and create dramatic opportunities for investors.  Against both the US dollar and euro, currencies in which many expats are paid, sterling has depreciated by around 15% to 20% over the last three years. This has given overseas buyers an additional effective price cut, so it becomes clear why UK property is now offering very good value for overseas investors.

Average house prices in the UK increased by just 2.7% in the year to October 2018 according to the Office for National Statistics, down from 3.0% in September 2018. This is the lowest annual rate since July 2013 when it was 2.3%. The lowest annual growth was in London, where prices fell by 1.7% over the year to October 2018, following a fall of 1.8% in the year to September 2018.

Over the past two years since the UK voted to leave the EU, there has been a gradual slowdown in UK house price growth, driven mainly by a slowdown in the south and east of England. According to estate agents You Move, some of Britain’s wealthiest areas have had up to 25% wiped off their value in 12 months as Brexit uncertainty continues.

Data from the property portal Rightmove revealed the average asking price of a London home had fallen below £600,000 for the first time since August 2015 and now stands well below the previous peak of almost £650,000, which was hit just before the Brexit vote in 2016.

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 are keeping active

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

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

Brexit

This is the one unknown area that could affect the property market, if all the experts are correct it is unlikely to have any lasting long-term damage. Facts are whatever happens the UK property market is very likely to remain strong and positive,

Applications

Expat mortgage applications are currently at an all-time high and the outlook for 2019/20 remains positive. It would seem that the high property prices do not deter the investor. Expats seem to have the attitude that investing in savings accounts are a lost cause and property offers far better returns in the long run.

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.

Need assistance?

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

Expats should review their mortgages in the UK

Recent comments from the Bank of England suggest that UK base rates could be heading lower in the short term. This seems to be based on the likelihood of a no-deal Brexit which is currently the central policy of the new Prime Minister Boris Johnson. While we have seen this type of speculation in the past, money markets are now indicating this is a very real possibility and one which expat homeowners may need to address. So, when is the right time to refinance your mortgage?

To say that we are in uncharted waters in the UK is an understatement to say the least. The 2008 economic downfall was like no other seen in living memory. The slow economic recovery could be described as “false” bearing in mind the amount of quantitative easing and historically low interest rates propping up markets. So, if we now turn our attention to the potential to refinance mortgages, when is the right time?

Today is the only certainty

If we take a step back and look at the situation from a distance, interest rates today are the only ones we can quote with any real certainty. Yes, the Bank of England has suggested falling the short term to cushion the blow of a no-deal Brexit. However, if you wind back just a few months there was speculation that UK base rates could be headed higher, so can we believe with any certainty what Mark Carney is saying?

As we mentioned above, the only definite interest rate is the one you see before you today. So, if you are considering refinancing your mortgage it is probably worth approaching a mortgage broker to see the best deals on offer. You would obviously need to take into account any additional charges, early redemption penalties, locked in interest rates and forecasts for the future.

Can we help?

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

Expats moving fast into the buy-to-let market before Brexit

Brokers are reporting the largest number of buy-to-let mortgage applications from expats than ever before. This is not a surprise, in general the buy-to-let market is currently booming for all kinds of reasons.

Expats see this market as value for money, bank interest rates are low and there is real potential for capital growth on any re-sale and a better income than the banks are offering.

Interest in the UK property market has seen an up surge in viewings since the turn of the year. Estate agents up and down the country are reporting an increased interest in property at the lower end of the market from expats living abroad.

Are good deals for expats available?

Well, the simple answer to that is most certainly yes. Expats are always surprised at the very good rates that are available to them. Mortgage lenders currently are fighting to secure business in a very competitive marketplace, reducing both interest rates and fees.

Brokers have seen an increase in longer term fixed rate mortgages recently as clients want to know the outgoings of their investment property. Many other types of plans are on offer and it is prudent to consider all options before deciding.

It is commonly known with buy-to-let mortgages that the larger the deposit you can put down a lower interest rate can be achieved.

Need assistance?

Our professional independent advisers are used to dealing with all types of buy-to-let mortgages and they have vast experience in this area. Please do call to discuss your requirements and we will be happy to assist.

Brand new range to help the expat

The Ipswich Building Society’s expat range is now available to applicants paid in foreign currencies, as those paid in pound sterling (GBP).

The new range consists of the following products and is available to direct applicants, intermediaries based in the Society’s heartland area, and members of selected networks and clubs:

• 2-year fixed rate at 3.10% until 30 September 2021 (5.4% APRC)

• 2-year discount rate at the Society’s Standard Variable Rate (currently 5.74%) minus 2.94%, giving a current pay rate of 2.80% for two years from the completion date (5.5% APRC)

• 5-year fixed rate at 3.34% until 30 September 2024 (4.9% APRC)

All products are available up to 80% loan to value (LTV) and have an application fee of £199, a completion fee of £800, a CHAPS fee of £35, and a tiered valuation fee based on property value applies. During the product period, the Society offers fee-free overpayments up to 50% of the original loan amount.

For overpayments in excess of 50% of the original loan amount, or early redemption, an Early Repayment Charge (ERC) applies. For overpayments this charge is calculated on the overpayment amount that exceeds the 50% allowance, and for early redemption is calculated on the original loan amount.

Loans are available from £75,000 to £500,000 with a maximum term of 40 years. Applicants must be employed by a recognised multinational firm and have a minimum income of £40,000 GBP or equivalent paid in any of the following 10 currencies: euro, Swiss franc, Norwegian krone, US dollar, Canadian dollar, Singapore dollar, Hong Kong dollar, UAE dirham, Kuwaiti dinar, Qatari riyal.

Affordability assessments will take into consideration employed applicants as well as retired borrowers, with 100% of pension and 75% of investment incomes used when calculating affordability.

Can we help?

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

Interest rates are held, good news for Expats

The Bank of England’s monetary policy committee has voted unanimously to keep the base rate at 0.75%.

The rate has now been at this level for nearly a year, having been raised from 0.50% on 2 August 2018. The minutes reveal that the MPC has cut UK growth expectations for 2019 from 1.5% to 1.3%, and for 2020, from 1.6% to 1.3%. The MPC also believes that a no-deal Brexit would result in the sterling falling lower than its current levels along with CPI inflation increases and GBP growth slowing down.

Noting that core CPI inflation came in at 1.8% in June, the minutes add that if a “smooth” Brexit occurs and there is some global growth recovery, the committee “judges that increases in interest rates, at a gradual pace and to a limited extent, would be appropriate to return inflation sustainably to the 2% target.”

It adds that sterling would also rise in this situation.

In the accompanying inflation report for August, the bank revised several targets upwards for Q3 2019 – Q1 2020, namely that: expected mortgage approvals for house purchases was changed from 60,000 per month to 65,000 per month, the prediction that the UK house price index would fall by 1.25% in 2019 changed to rising by “just over” 2% in the year to Q1 2020, and that housing investment would fall by 0.50% per quarter would now fall by 0.25% per quarter.

Facts are we might have a new prime minister but the fundamentals in the UK remain the same, so this wait and see approach makes sense. The country is experiencing enough uncertainty and drama, with Boris Johnson reaffirming the threat of a hard Brexit, and the potential of a general election in the coming months.

The real worry is the strength of the pound, which has now reached a 31-month low. Regardless of the Bank of England’s actions, there will still be a downward pressure on sterling. A lower pound rate will benefit UK exporters, but will also raise the consumer price for imported items such as food and fuel. And since the UK is a net-importer, the poor exchange rate is going to be felt across the board.

Expat mortgages

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

Expats should take note

Mortgage rates have plummeted since January, but would-be expat borrowers and re-mortgagers are being urged to strike now to take advantage of the competitive market.

Whether you are borrowing using a two-year deal, a five-year fix or even locking into a long-term 10-year fixed rate, prices are more attractive now than they were in January.

Indeed, the data analysts, revealed those borrowing money for their home using an average two-year fixed-rate mortgage this month will have paid an average rate of 4.2% compared to the 4.45% they would have been charged in January.

Five-year fixes, meanwhile, have fallen from a typical 4.33% in January to 4.1% today.

In fact, it’s much better to be a borrower than a saver as whilst prices are falling on mortgages, when it comes to savings the interest rates on offer have fallen since January too.

Borrowers urged to fix soon

The message from experts, for expats who might be waiting for prices to go down further, is to consider fixing their mortgage soon to take advantage of the deals currently on offer.

Interest rates are currently low but how long this trend will continue with Brexit looming is anyone’s guess.

Expat first-time buyers should keep a close eye on their finances and be mindful that with house prices on the rise in the UK, their dream of getting onto the property ladder may be further away than first thought. While interest rates are a convenient measure to compare deals, it is important that borrowers consider a mortgage based on the overall true cost, particularly to save on any upfront fees.

Seeking out independent financial advice is a good idea to navigate the mortgage minefield.

Can we help?

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

Expats are getting wiser by the day

There was a surge in re-mortgage activity in April, May and June of this year, as expat borrowers look to lock into cheap deals ahead of an expected interest rate rise.

Since the financial crisis in 2008 mortgage rates have steadily fallen. The Bank of England cut interest rates in August 2016 from 0.50% to 0.25% – the lowest on record and the first interest rate cut since 2009 when the financial crisis was at its peak. This led to a number of lenders slashing their rates and competition in the mortgage market heating up.

However, with the Bank of England hinting that it could raise interest rates in the near future as Brexit fears take a grip, economists are predicting a hike could come as soon as November this year.

Record low mortgage rates continue to sustain market activity, many of the Bank of England’s Monetary Policy Committee are now adding to the calls for an interest rate rise, this picture could very quickly change.

A “wait and see” approach is best avoided for existing expat UK homeowners considering re-mortgaging.

The number of expat mortgages approved also went up in May and June, suggesting the market is picking up steam before the Brexit outcome is decided..

Expats who avoid reviewing their current mortgage deal could well pay for this error in the long term as interest rates look to be going upwards. Not everybody will benefit from changing their mortgage, but it certainly makes sense to check how your existing deal stands up to the future.

Contact us.

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