“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,” said Offshoreonline spokesman Guy Stephenson.
As the threat of an increase to UK Base Rate recedes, Offshoreonline reports several lenders have begun to cut expat mortgage rates and reduce bank administration fees. They report that variable rate loans are available for expat buy-to-let purchases from 2.89% from experienced lenders in the market, whilst 2 year fixed rates start at 3.19% and 5 year fixed rate at 4.19%.
Offshoreonline, the UK based specialist expatriate and international broker, offer advice on UK, French, Italian, Portuguese and Spanish mortgages. They believe that expat buyers remain concerned about possible mortgage interest rate rises, but as Stephenson points out, these may end up being far more modest when the 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”, thinks Offshoreonline. “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,“ explains Stephenson. “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 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.