Thursday, June 20, 2024

‘New normal’ interest rates fuelling mortgage applications from overseas buyers and expats

A belief that very low interest rates are ‘the new normal’ and an ongoing property undersupply are the driving factors behind a “considerable surge” in mortgage enquires for UK properties, reports deVere Mortgages.

Mortgage enquiries increased by 30 per cent in October, reports deVere Mortgages, part of deVere United Kingdom, with the vast majority of new enquiries coming from overseas buyers and British expats.

Mike Coady, Managing Director of deVere Mortgages, explains: “There has been a month-on-month increase in mortgage enquiries since January. This trend shows no sign of slowing down and deVere Mortgages have announced a recruitment campaign to handle the extra numbers. More than 70 per cent of all enquiries come from foreign nationals or British nationals living and working abroad. The overwhelming majority of these individuals, approximately 60 per cent, currently reside in Switzerland, UAE, Qatar and China.”

He continues: “There are two key drivers that are fuelling the considerable surge in mortgage enquiries. First is that interest rates have been historically low for so long now, that there is a widespread belief that that very low interest rates are now the new normal. Indeed, rates are low in nominal and real terms and against any benchmark you seek and this is encouraging people to invest in property.”

“With headline CPI inflation back to zero, it is perceived that a UK rate rise is unlikely until at least the second half of next year at the earliest – and even then they will remain very low and not expected to return to pre global crash levels. Second is the strong UK property market outlook and high rental yields, which is driving demand. This is compounded by the perpetual undersupply of properties in key areas such as London, the South East of England and Manchester.”

He continues: “Due to these motivating factors, it is our experience that overseas buyers and British expats are keener than ever to purchase property in the UK. There is a real sense that now is the time to do so due to an attractive and stable environment.”

Mike Coady concludes: “A large proportion of British expats will ultimately return to the UK at some stage and, understandably, would like a home to go back to. Yet despite typically earning higher salaries than their contemporaries in the UK, often due to working in a tax-free or low tax environment, many have pushed back this important financial goal due to more immediate issues. Until now.”

deVere Mortgages, which works with more than 200 UK and international lenders, can assist UK residents and overseas clients with the purchase and refinance of their UK home with a variety of mortgages. In addition, deVere Mortgages also specialises in buy-to-let opportunities, re-mortgaging overseas properties and tax optimisation from rental income.

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