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Expat Investor : September October 2009
Figures from moneysuper market.com show that the alarming fall in available mortgage products has continued, despite previous claims of 'green shoots' in the housing market. The tracker mortgage market has been the worst hit, with the number of available products falling 81% since July last year, whilst the number of fixed rate mortgages has fallen by 46%. The biggest drop has been in the number of one year tracker products available, which has fallen from 522 on July 1st 2008, to just two remaining a year later, a fall of 99.6%. Over the same period the number of two and three year tracker deals EXPAT MORTGAGES in association with expatinvestor.com 22 EXPAT INVESTOR September/October 2009 Lender Notes Bank of Scotland International Rate linked to EURO LIBOR + 2.90% with option to set rate for 3, 6, 12 months. Max 70% LTV. Interest only or capital repayment. Min £500k. Max term 20 year s. Arrangement fee up to 1%. Redemption charge applies. Rates also available on same ter ms in US dollar, Swiss Franc, Japanese Yen and HK dollar. Barclays Bank Rate linked to Barclays Bank 3 month LIBOR rate applicable for a 90 day interest period. For house purchase only. On an interest only basis, max 65% LTV, advance £500k, term 5 to 20 yrs and fee 0.5%. Redemption charge applies. Barclays Euro Current Account required. Rates also available on same ter ms in US dollar, Japanese Yen, Swiss Franc and Hong Kong dollar. Investec Private Bank Rate is based on EURIBOR +1.25% to 2%. Max 70% LTV. Upfront fee of up to 1%. Min adv of £1m in euro equivalent. No redemption fee penalty. Also available on same basis in US$, Swiss Franc Japanese Yen. Managed multi-cur rency also available. Leeds Building Society Irish product. Fixed rates available. Max 70% LTV. No fee. No redepemption penalty payable. Rates linked to Euribor available: Euribor + 3.00% for ter m. Max 50% LTV. No fee. No redemption fee. Euribor + 3.25% for term. Max 70% LTV. No Fee. No redemption fee payable. Mor tgages for borrowers who are paid in euros to purchase or remortgage their main UK proper ty Source: MoneyFacts Lender Location Currency Banco Halifax Hispania Spain Euro HSBC France, Spain, Malta Euro, Maltese lira or selected major currency Investec Private Bank France, Italy, Spain, Por tugal, Monaco & Guernsey Sterling, euro, Leeds BS Gibraltar, Spain Sterling, euro Lloyds TSB France, Spain, Portugal, Australia, NZ, Canada, US, Dubai, Hong Kong, Singapore & UK Cur rency of choice Newcastle Building Society Gibraltar Sterling Norwich & Peterborough BS Gibraltar & Southern Spain Sterling Royal Bank of Scotland International Souther n Spain Euro, sterling International Private Finance France, Spain, Portugal, Italy, Florida, South Africa, Australia, NZ. Euro, sterling, US dollar Source: MoneyFacts Lender Rate % Max. % Fee Notes Bank of Scotland International N/A 80 0.5-1% Lifetime tracker and fixed rates available Barclays Wealth 4.99 80 Varies Fixed, tracker and SVR Halifax 3.5 75 Varies Standard mor tgage range NatWest International 4 70 0.75-1% Fixed and tracker rates. Min £50k NatWest Mtg Ser vice 4 85 £299-£1499 Standard mor tgage range available Royal Bank of Scotland 4 85 £299-£1499 Standard mor tgage range available Royal Bank of Scotland Int 4 70 0.75-1% Fixed and tracker rates available Figures compiled: 3/6/09. Source: MoneyFacts www.moneyfacts.co.uk Expatriate = UK residents working abroad short-term and buying a property in the UK. Lender may allow property to be let. EXPATRIATE MORTGAGES EURO MORTGAGES OVERSEAS PROPERTIES Are tracker mortgages facing extinction? Lender Location Bank of Scotland Inter national UK proper ty Barclays Bank UK proper ty Investec Private Bank UK & selected European property NatWest Offshore UK proper ty RBS International UK proper ty Currency switching allowed on all major currencies Source: MoneyFacts FOREIGN CURRENCY LOANS has fallen by 74% and 73% respectively. Louise Cuming, Head of Mortgages, tells Expat Investor, "The fall in tracker mortgages highlights how the last 12 to 18 months have seen a complete meltdown in the mortgage market. The figures show that four out of five tracker products available 12 months ago, when the base rate was at five per cent, have disappeared. "Whilst it may not be surprising to see lenders pulling these products, it is a stark reminder that lenders call the tune and competition is no longer the name of the game. The flight of borrowers to fixed rates has definitely been precipitated by lenders who have decimated the choice of tracker rate alternatives." The last 12 months have seen tracker mortgage rates rise in relation to the base rate. The average of the best two year tracker from each of the main providers currently stands a little more than 2.5% above the base rate, whereas 12 months ago the same figure was just 0.9% above. Ms Cuming continues, "Banks which had large number of tracker mortgages on their books have had their fingers burnt by the dramatic fall in the base rate. It isn't surprising that they are now a little unwilling to get back into that market, especially with the base rate remaining so low. At the same time, customers may be concerned that a tracker mortgage at 2.5% above the base rate could quickly become very expensive." Ms Cuming's concern remains around the lack of choice. "Fixed rates, tracker rates and SVR This time last year there were 522 tracker products available to borrowers. Today there are just two remaining. We asked moneysupermarket.com to comment on the reduction in products. products all have a place to meet individual needs which are all different. Now more than ever there can not be a 'one size fits all' solution to increasingly complex needs. Unfortunately, given the low appetite for volume lending, providers no longer have the competitive drive to deliver choice. In the end, this means borrowers suffer. "For consumers looking for a new mortgage, the near entire absence of tracker products shouldn't put you off looking around for them; the trackers that are still available are generally much cheaper than the equivalent fixed rate deals. "The decision between a tracker and a fixed rate is always somewhat of a gamble, and whilst some people like the certainty a fixed rate mortgage affords, the savings on offer from tracker mortgages are hard to ignore. "Almost everyone agrees that the base rate must eventually rise, but no one knows quite when this will happen, and if rates remain flat for another six months or so, those opting for tracker may save hundreds of pounds." NUMBER OF AVAILABLE TRACKER MORTGAGE PRODUCTS: Date 1Year 2Year 3Year 5Year Term Tracker Tracker Tracker Tracker 20th July 09 2 145 141 18 60 1st July 08 522 548 519 7 341