Expat rates tumble
Recent falls in expat mortgage interest rates plus the effect of a weak housing market in the UK look set to give expat house buyers a significant negotiating edge in the busy buying period when many expats return to the UK.
The availability of lower expat mortgage rates, whilst at the same time, many regions in the UK are reporting softer domestic housing demand and falling prices opens up opportunities for overseas buyers who are not affected by domestic UK economic pressures.
As the threat of an increase to UK Base Rate and with-it expat buy to let mortgage rates recedes, several lenders have begun to cut expat mortgage rates and reduce bank administration fees. Variable rate loans are available for expat buy-to-let purchases at very competitive rates across the board.
Expat buyers remain concerned about possible mortgage interest rate rises; these may end up being far more modest when UK Base Rate does eventually increase. The period since the financial crisis has been one of abnormally low UK Base Rates, but equally unsustainably high bank margins, as banks have rebuilt their balance sheets. Before the 2008 financial crisis, many mortgage providers would typically aim for a margin of anything from 0.75% to 1.25% over UK Base when setting mortgage interest rates, but today, many lenders are still achieving nearly three times this level of mark up on loans. As and when UK Base rates do rise therefore, lenders will have the ability to trim margins, so the impact on borrowers can be softened.
British buyers overseas can be faced with a daunting task when trying to buy in the UK, as loans now have to meet strict affordability criteria, whilst many lenders will cherry pick the countries where they will lend to expat buyers. Using an established and experienced independent broker who will match buyers to lenders is important and will save time and money in the long term in such a complex and evolving market.
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