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.

 

Since the end of last year, the expat mortgage market has seen much more activity in both new and re-mortgage applications.

The UK property market continues on an upward spiral albeit slower than years gone by and still offers potential longer-term growth and security. Expats are always keen to secure property in the UK and this year is no exception as applications for new mortgages are at an all-time high.

Most experts believe these high activity levels will remain for the foreseeable future, with all the uncertainty expats want a UK foothold.

Confidence in the UK market has grown again since the turn of the year due to interest rates still being held after the threat of increases.

What does the future hold in store for expats?

This is a difficult market to predict in the long term, but if the past is anything to go by then UK property will hold its own and increase in value. Whatever happens with the pandemic property values are more than likely to remain strong. Several factors control prices, the main ones are listed below:

• Supply and demand currently supply only meets 47% of the demand.
• Mortgage interest rates are low and affordable.
• UK economic growth is currently strong, and the outlook is stable.

So looking at the key factors the housing market looks in good shape for the future. Of course, situations can change very quickly, not to mention Covid-19, but on the whole, the UK property market looks to be in a very healthy state especially if the supply does not increase.

Mortgage help?

Should you require any assistance with your new or re-mortgage please call one of our fully qualified independent consultants and we will be happy to assist.

More expats with mortgages on UK properties are looking to lock in a longer fixed deal than ever before. Experts believe this situation has been brought about due to the Brexit uncertainty and what could happen to the mortgage market in the immediate future.

Popularity of longer-term deals had waned at the start of 2020 with expat borrowers opting to fix their mortgage for two years, according to the latest figures.

In the later part of last year demand for five-year fixed-rate re-mortgages went up 32%, representing half the market according to the report.

Lenders are eager to attract longer-term business which has created a competitive landscape for expats. This has ensured five-year average rates have remained relatively flat month-on-month.

Five-year fixed deals tend to be more popular amongst borrowers who are seeking stability. Expats will be opting for these deals to provide some certainty amid the potential economic and political upheavals in the next few years due to Brexit and now Coid-19

Currently over 71% of expats re-mortgaging expect a rise in the Bank of England (BoE) base rate this year. This compares to 35% in April 2020.

After hints of a rate increase earlier in the year, sluggish economic growth discouraged the BoE from raising the base rate. Yet more than three quarters of borrowers still believe another base rate increase will happen at some point in the next twelve months.

Independent brokers

It also emerged the number of expat borrowers using an independent broker to re-mortgage has also hit a record high in December/January.

Can we help?

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

2020 proved to be a very strange year indeed with the pandemic capturing the headlines every day and the economic consequences of the lockdowns impinging on every aspect of daily life.

However following an initial hiatus in the Spring the housing market bounced back strongly – and somewhat surprisingly – as evidenced by the statistics provided by some agents, lenders, and the Land Registry.

It is worth taking a closer look at some of these statistics and what they might tell us about government policies in relation to the housing market and mortgage lending.

For example, it seems likely that in most parts of the country any savings purchasers made as a consequence of the Stamp Duty holiday were wiped out by the increased price they had to pay for the house.

Sources

The Land Registry recorded a 7.6% increase in average house prices (with all these statistics ‘houses’ include flats) with the average property price for the UK reaching £249,633 in November.

The Land Registry uses completed sales transactions so there is a time lag before its statistics are updated. The Nationwide index rose 7.3% to £230,920 in December. The Halifax index finished the year 6% up at £253,374.

The future.

So what has been going on? Conventional wisdom would suggest that in a period of economic uncertainly, rising unemployment, and eye-watering levels of government borrowing we would see a fall in property prices or at the very least a much-subdued market.

The Land Registry statistics are based on all completed sales many of which are cash sales that do not involve a mortgage.

The Halifax and Nationwide statistics are based only on transactions involving a mortgage. Typically about a third of sales are for cash and this proportion is even higher in retirement areas.

The Nationwide index is statistically weighted to compensate for this so we have the Land Registry said prices have risen 7.6% and Nationwide closely shadowing this saying 7.3%.

Halifax is much lower at 6% although the Halifax average price is higher than Nationwide’s.  What they all agree is that 2020 saw a significant increase in house prices.

Interest rates

The main factor driving the housing market is the current historically low level of interest rates and the fact that mortgage lenders were able to continue to support the market by lending throughout the pandemic.

These low interest rates will not last forever, but they do currently bolster affordability and borrowers who are fearful of an interest rate hike can currently opt for a fixed rate extending some years into the future.

 

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

The number of expats re-mortgaging in December and January increased by more than a third year-on-year to almost 3,300 – the highest number since January 2011.

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 December and January alone.

Expat borrowing activity has been fuelled by the lower rates on offer, rates currently are the lowest they have been for the last 7 years. However, there are fears the boom may not last, amid a fall in affordability and expectations of a rise in interest rates.

In January, the repayment as a percentage of total income rose month-on-month from 17% to 18%, while 54% of those surveyed in February expect a rate rise within the next year.

Expats who have not reviewed their current mortgage deal recently would be well advised to do so as rates are expected to rise later this year.

Help required?

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