Brexit Impact On UK Mortgages

12 July 2016

Will Brexit make it harder for foreign investors in the UK to get a mortgage? Stuart Marshall, UK mortgage expert and MD of Liquid Expat, shares his view.

Brexit may have created a tremendous amount of uncertainty for a portion of UK residents, but looking beyond the British bubble, it's really business as usual for many property investors buying into the UK property market. This is especially true for British expats who are looking for UK mortgages. In this sense, nothing has really changed; Liquid Expat still has access to the same mortgage products, and even has access to new lenders entering the market days after the Brexit vote.

In the meantime, an expat's ability to secure finance will remain the same; this is coupled with widespread agreement that we will be living in an extraordinary period of certainty where interest rates are concerned, with an imminent base rate reduction to 0.25% and no foreseeable increase until 2020 at the earliest. When we remind ourselves that property has and always will be considered a long-term investment, this is a very favourable factor to consider when making new purchases.

Many expats believe that Britain’s decision to leave the EU may actually work in their favour when purchasing property in 2016. Since the exit vote, Liquid Expat has seen a large increase in enquiries from expats in Hong Kong and the UAE, who have been incentivised into looking at investing in the UK property market thanks to their immediate buying power when converting their overseas income and savings into a weakened pound.

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In any event, with strong demand for housing in the UK, market fundamentals haven't been negatively affected from a mortgage perspective. This outlook is very much echoed by all the lenders that Liquid Expat work with, including new lenders who have approached our brokers to access the expat mortgage market. Furthermore, the Bank of England has relaxed adequacy controls over the banks to encourage them to increase lending to borrowers, including expats.

In the longer term, there may in fact be improvements to the UK expat mortgage market. In March 2016, the EU Mortgage Credit Directive (MCD) came into effect to regulate mortgage activities in member states, increasing currency regulation in the expat mortgage market. This reduced competition, as a number of lenders (including Natwest and Halifax) withdrew from the expat mortgage market as a result. However, an independent UK would no longer need to comply with this framework, abiding instead by the already stringent guidelines of the Financial Conduct Authority (FCA). This, in the longer term, would encourage competition, improve choice, and therefore make finance more accessible for more expats investing in UK properties.

Beyond the mass hysteria surrounding the UK's vote to leave the EU, it's clear that very little has changed in the expat mortgage market as a result of Brexit and in fact there are real opportunities for foreign investors to lock in good interest rates now, or at a later date to find a more competitive mortgage.


 

Written by Stuart Marshall

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