‘New normal’ for interest rates is fuelling mortgage applications from overseas buyers and expats – a report concludes
The report believes that the current very low interest rates are ‘the new normal’ and that an ongoing property under-supply is the big driving factor behind the “considerable surge” in mortgage enquires for UK properties.
Mortgage enquiries increased by 30 per cent in October, reports deVere Mortgages, with the vast majority of these new enquiries coming from overseas buyers and British expats.
The MD at deVere Mortgages, Mike Coady, explains: “There has been a month-on-month increase in mortgage enquiries since January. This trend shows no sign of slowing down and we have had to announce a recruitment campaign to handle these 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.”
