Plenty to please Expats! Best investment option by far!

The average price of a house in the UK now stands at £230,700, some 30% above the market peak seen in 2007, the house price index has revealed. 

On a yearly basis house price growth was up 5.4% year-on-year in June, more than double the 2.2% year-on-year price growth seen 12 months ago.

The data shows that prices are being propped up, in part at least, by a chronic undersupply of properties coming to market.

There has been a 25% fall in the volume of homes for sale in the first half of the year when compared to the same period last year. Supply has failed to keep pace with demand since January 2021.

Transaction volumes however remain strong – up 22% on the average levels seen in 2020.

That said, buyer demand dipped 9% in the first half of July after the initial stamp duty holiday ended, but overall remains elevated – up 80% compared to the average for this time of year in the more ‘normal’ market conditions in 2017-19.

Price growth is expected to edge upwards to 6% in the coming months before easing back towards the end of the year as the impact of the extended stamp duty holiday unwinds and the economic landscape becomes more challenging.

A number of factors will continue the elevated demand for houses through to the end of Q4, including ongoing buyer preference for more space.

What about the expat mortgage market after Brexit?

The market so far has been largely unmoved by Brexit. Lenders have continued to drop interest rates across the board since last summer which indicates a lack of concern currently.

There seems to still be a large appetite for banks to lend. The rates are very competitive and there are still plenty of high loan-to-value mortgages available to consumers.

If anything is to bring this to halt then it would be the Bank of England base rate rising. If the bank were to raise rates from 0.25 per cent to 0.5 per cent, the impact would be greater than just a rise in mortgage repayment, because inevitably confidence will take a hit. Yet so far, there have not been any firm indications that this is the way the Bank of England wants things to go.

If you are an expat with a mortgaged property in the UK now is a great time to lock in a new deal for the next few years and make the most of the low rates on offer.

Expats re-mortgaging to secure the future

Expat re-mortgaging levels have soared to an eight-year high in September as borrowers take advantage of lower monthly repayments the latest figures have revealed.

The value of re-mortgaging fell due to a drop in the average loan size, but with overall mortgage activity down it still accounted for two-fifths of total lending in June this year.

Expats who have not reviewed their current mortgage deal recently would be well advised to do so as rates are expected to rise in the future.

Help required?

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

 

Expats, does your mortgage need reviewing?

Best advice is to get it reviewed to ensure you are on the best deal.

The low rates on offer will NOT last forever – act now and save.

A former Bank of England Monetary Policy Committee member has predicted that interest rates could rise significantly in the next few years.

Inflation has now caught up with wage growth causing a sharp consumer slowdown and the weak pound has also squeezed consumers and the expectation is that households will adjust their spending downwards.

More and more expats are looking for ways to reduce their monthly outgoings. One of the biggest expenses most people have every month is their mortgage payment.  Keeping this in mind it would be a wise move to review your current mortgage to ensure you are on the best deal possible.

This will not be the case for everybody, your current deal may well be particularly good, but it is most certainly worth checking before the end of the year.

It is highly recommended to seek professional independent advice as to what new deal could suit your current situation.

Reasons to consider a re-mortgage.

  • To save money.
  • Raise extra cash for a project you have planned.
  • Your current deal is ending soon
  • Transfer to a fixed medium/long term deal

Help required?

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

Expats who do not review their mortgage could be paying 1000’s more!!

Now more than ever expats are looking for ways to reduce their monthly outgoings, one of the biggest expenses most people have every month is the mortgage payment.

As an expat there is a lot of uncertainty at the moment with poor exchange rates and the Brexit situation taking time to settle. It may be a very prudent 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.

This will not be the case for everybody, your current deal may well be exceptionally good, but it is most certainly worth checking as the wrong deal could be costing you thousands extra every year.

Expats have an excellent choice of mortgage deals currently available, so it is a particularly good time to check you are not paying more than you need to.

If you decide to re-mortgage this may an opportune moment to review any expensive loans and credit cards you may have. It is likely the UK property has gained in value giving you a larger equity which could be used to reduce the expensive debt.

Reasons to re-mortgage

  • To save money.
  • Raise extra cash for a project you have planned.
  • Your current deal is ending soon
  • You want to pay more to clear the loan earlier and the lender will not permit this.

Can we help?

If you would like to review your current expat mortgage do make contact and one of our fully qualified independent advisers will be happy to assist.

 

Stamp Duty Did You Know?

The current stamp duty holiday on properties valued up to £500,000 comes to an end on 30th June but did you know that you can still enjoy a stamp duty holiday on properties valued up to £250,000 when your purchase completes by 30th September.  The additional SDLT for second homes and expats remains in place, but there are still 3 months left to take advantage of the buoyant UK housing market and make your purchase with considerable saving.  If you have been considering a new purchase in the UK with an expat mortgage, please get in touch so we can provide you with indicative quotes tailored to your needs.

 

Great news for Expats with property in the UK

Property prices rose 1.8% in May to reach a new record average price of £242,832, according to Nationwide.

The building society said prices are up £23,930 over the past 12 months alone, an annual growth rate of 10.9% and the highest recorded in seven years.

The market has seen a complete turnaround over the past twelve months. A year ago, activity collapsed in the wake of the first lockdown with housing transactions falling to a record low of 42,000 in April 2020. But activity surged towards the end of last year and into 2021, reaching a record high of 183,000 in March.

While March’s spike in transactions was driven by the original end date of the stamp duty holiday, a lot of momentum has been maintained. Research indicates that the extension to the stamp duty holiday is not the key factor, though it is clearly impacting the timing of transactions.

Amongst homeowners surveyed at the end of April that were either moving home or considering a move, more than two thirds (68%) said this would have been the case even if the stamp duty holiday had not been extended. It is shifting housing preferences which is continuing to drive activity, with people reassessing their needs in the wake of the pandemic.

The frenzy to snap up a property at the tail end of a pandemic is showing no signs of stopping, with double digit growth in house prices throughout May – the highest we have seen in the best part of a decade.

It is still crucial that prospective buyers go into the process with a sound understanding of the market and what they want from a new property.

As demand in the market increases, the extra competition creates a fear of missing out that can distract buyers from the fundamentals. It’s important not to let the current property frenzy draw attention away from what you are really looking for.

Expats, looking to lock in longer deals

Mortgages with five-year fixed rates have undergone a surge in popularity within the expat community, nearly half of the completed deals recently have been for 5 years or more.

Data revealed 49% of expats are now choosing an initial fixed rate period of five years compared to only 25% back in 2015.

Meanwhile, mortgages with rates fixed for two years have experienced a plunge in popularity with 36% of customers choosing the shorter-term fixes compared to more than half in 2015.

Brokers think the fact the Bank of England base rate is currently low, coupled with fears over future rate rises, is main driver behind the soaring popularity of five-year deals, which allow customers to lock into a specified rate for a longer term.

Potential pitfalls of five-year deals

While they provide a certain amount of security, five-year fixes aren’t necessarily for everyone. Indeed, several of those questioned in the survey of 200 mortgage intermediaries raised concerns.

They stressed that products with a longer term initial fixed period might only be suitable for customers who expected to stay in their current home for an extended period. This was because anyone considering a house move might have to pay early redemption penalties which could outweigh the benefits of a longer-term deal.

Low interest rates, economic uncertainty around Brexit, a reduction in home-mover transactions and more re-mortgaging means that five-year products have become a viable option for a much larger proportion of customers.

Outlook

Going forward, the brokers questioned, did not see any reason for five-year fixed rates to fall out of favour.

However, many said a stable economic climate post Brexit, which could lead to an interest rate rise, was the most likely cause of any reduction in the attractiveness of the five-year fix.

In need of some guidance?

Can we be of assistance with your new mortgage/re-mortgage we have fully qualified independent advisers waiting to help you.

Expat landlord incorporations hitting new heights

The number of UK and international landlords choosing to register as a limited company to manage their portfolios is on the rise.

A spike in international investors enquiring about forming a limited company, up 62% year-on-year.

 Last year, there were a total of 41,700 buy-to-let incorporations, an increase of 23% on 2019. The numbers have more than doubled since 2016, rising 128%, when tax changes for landlords were introduced.

Between the beginning of 2016 and the end of 2020 more companies were set up to hold buy-to-let properties than in the preceding 50 years combined. Companies set up to hold buy-to-let properties were the second most common company founded during 2020, with companies selling goods online or by mail order in first place.

More than a third (34%) of all companies set up to hold buy-to-let properties in 2020 were in London. Together, London and the South East accounted for almost half (47%) of all incorporations.

Advantages

If landlords hold property in a limited company, they have the ability to offset 100% of mortgage interest against profits, while those holding a property in their own name can offset just 20%. Investing in property through a company provides landlords with higher levels of tax relief and personal tax savings. Landlords can grow their BTL portfolio more quickly, as there is no income tax on the retained profit, thus allowing more cash to re-invest.

Although corporation tax is payable on trading profits, this is lower than the higher income tax rate. However, running a portfolio through a limited company is not right for everyone.

One of the main benefits of remaining a private landlord is that any post-tax profits can go straight into their pocket. Profits can be used then for anything they choose – all paid for by the tenants.

 

Expats lending expanding rapidly

February 2021 gross mortgage lending to expats has increased by 6.8% from the month before, this is the fourth month on the run. In addition to the month-on-month increases lending this year has increased 18.2% overall.

Experts believe these strong figures are down to Brexit. 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.

Covid-19 has had an effect on the market, but the majority of experts believe this will be very short lived.

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 extremely attractive deals on offer.

UK property offers really good long-term 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.

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 will not 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 are defiantly re-thinking their mortgage plans.

There was a surge in re-mortgage activity in February and March 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.

However, with the Bank of England hinting that it could raise interest rates in the near future and economists are predicting a hike could come as soon as July/August of 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 this year, suggesting the market is picking up steam now the Brexit outcome has been resolved.

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.