Weakening British real estate market gives opportunities for expat buyers

Published:  14 Jun at 6 PM
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With the UK housing market weakening and no sign of a rise in overall interest rates, now’s the time for expat investors to grab a bargain.

As the busy summer house-buying period sets in, potential expat investors are expected to take advantage of lower expat mortgage rates and a generalised fall in house prices due to collapsing demand. Offshore financial firms are predicting a rush to buy from overseas investors not under constraint by domestic economic pressures in the UK.

It’s clear now that the UK base rate will continue to be frozen for a time, allowing for a lowering of mortgage interest rates for buyers living overseas as well as a reduction in bank administration fees. At the present time, variable rate loans can be had for expat buy-to-let investments from 2.8 per cent, offered by lenders experienced in the sector. Two-year fixed rates are starting at 3.19 per cent, with five-year fixed rates on offer at 4.19 per cent.

According to lenders, expat purchasers are still showing concern about future rises in the sector’s mortgage interest rates, but the likelihood of swingeing increases is being discounted by those in the know as the UK’s base rate isn’t in line for an increase. According to one lender, UK base rates have stayed unusually low since the 2008 financial crisis although high bank profit margins have stayed unsustainably high in order for financial institutions to reorganise their balance sheets.

Prior to the crisis, bank margins of between 0.75 per cent and 1.25 percent over the base rate were set, but many lenders nowadays are still getting up to three times’ mark up on property loans. This will give them room to trim margins and soften the effect on borrowers once the base rate begins to rise again.
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