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Expat Investor : December 2007
The US sub-prime crisis has created turmoil in international financial markets, but this is unlikely to have a significant additional effect on the rate of growth of house prices in the UK in the short term. Nationwide still expects house price growth in 2007 to come in close to the middle of its forecast range of between 5% and 8%. The expected slowing results from three main factors, each of which has been around for some time. First, weaker affordability, as house prices continue to grow more quickly than earnings; second, the effect of higher interest rates and inflation on consumers' pockets; and third, lower house price expectations. While it has taken some time for these factors to bite, there are now clearer signs of slower demand in the market reflected in the collapse in new buyer enquiries. In addition, the stock-to-sales ratio, which leads house price inflation by five to seven months, predicts a continued slowing in the annual rate of house PROPERTY INVESTMENT expatinvestor.com 22 EXPAT INVESTOR December 2007 We make life simple for you. 5.29% fixed until 28/08/09 for a personal service Expat BTL Mortgages www.irishpermanentintl.com +44(0)1624 641641 firstname.lastname@example.org Terms & conditions apply. Irish Permanent International is a registered business name of Irish Permanent (IOM) Limited which is licensed by the Isle of Man Financial Supervision Commission for Banking & Investment business. from Fast Facts 10017 Lender Notes Barclays Bank Rate linked to Barclays Bank 3 month LIBOR rate applicable for a 90 day interest period. For house purchase Fast Facts 10500 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 terms in dollars, Yen, Swiss Francs and Hong Kong dollars. HSBC International Rate is based on euro refinancing rate + 1.25%. Max 70% for house purchase and remor tgage if on repayment Fast Facts 10503 basis, or 65% for purchase and remtg on interest only basis. Max term -- 25 years on repayment basis or 15 years on interest only basis. Advance 100,000 -- 1m, fee 1,250. Income multiples 3.25 x 1st plus 1.25 x 2nd or 2.5 x joint. Applicant must have euro income. No redemption penalty payable. Investec Private Bank Rate is based on EURIBOR +1% to 1.75%. Max 70% LTV. Upfront fee of up to 1%. Fast Facts 10517 Min adv of £500k in euro equivalent. Also available on same basis in US$, Swiss Franc Japanese Yen, Australian $, Canadian $, Hong Kong $. Irish Permanent International Rate is based on EURIBOR + 1.24%. Max 75% purchase & remor tgage. No redemption fee payable. Fee 1% Fast Facts 10504 (min 1,500) Kaupthing Singer & Friedlander Rate is based on Euro LIBOR + 1.00% to 1.75% with option to set rate for 1, 3, 6 or 12 months. Fast Facts 10511 Max 70% for house purchase or remor tgages. Term 5 years interest only -- minimum advance £500k, fee varies. NatWest International Rate is based on 3 month LIBOR + margin. Max 60% purchase & remor tgage, on repayment or endowment Fast Facts 10507 basis, max term 30 years. Income multiples 3.75 x joint plus 1 x 2nd or 2.75 joint. Minimum advance £100k in euro equivalent. No redemption penalty payable. Fee -- refer. Mortgages for borrowers who are paid in euros to purchase or remortgage their main UK property Source: MoneyFacts Lender Location Currency Fast Facts Banco Halifax Hispania Spain Euro 10520 HSBC France, Spain, Malta Euro, Maltese lira or selected major currency 10503 Investec Private Bank France, Italy, Spain, Por tugal, Sterling, euro, US$, Swiss Franc, Japanese yen, 10517 Monaco & Guernsey Australian $, Canadian $, Hong Kong $ Leeds BS Gibraltar & Spain Sterling 10505 Lloyds TSB France, Spain, Por tugal, Australia, NZ, Canada, US, Dubai, Currency of choice 10506 Hong Kong, Singapore & UK Newcastle Building Society Gibraltar Sterling 10516 Norwich & Peterborough BS Gibraltar & Southern Spain Sterling 10509 Royal Bank of Scotland International Spain Euro or sterling 10510 Conti Financial Ser vices Can arrange finance in over 40 countries 10519 Source: MoneyFacts Lender Rate % Max. % Fee Notes Fast Facts Barclays Bank 7.89 95 Varies Fixed, tracker and SVR 10500 Derbyshire 7.75 90 Varies Fixed and tracker rates 10501 Halifax 6.69 75 £499 Fixed and tracker rates 10502 HSBC International 6.44 90 Varies Fixed, discounted and tracker rates 10503 Irish Permanent International 6.5 80 1 % (min £750) Tracker rates available 10504 Kaupthing Singer & Friedlander (IOM) 6.75 80 Varies Min £500k 10511 Leeds BS (Gibraltar) 7.75 95 Varies Fixed, tracker, discount and variable rates. 10505 Leeds BS (Spain) 7.75 70 Varies Fixed, tracker, and variable rates. 10505 NatWest International 7.94 85 0.5 Fixed and tracker rates. Min £50k 10507 NatWest Mtg Ser vice 7.94 90 0.5 All products available 10507 Norwich & P'boro 6.64 75 - Tracker rates 10509 Royal Bank of Scotland 7.94 85 0.5 Discount, fixed and flexible rates 10510 Royal Bank of Scotland Int 7.94 85 0.5 Fixed, tracker and flexible rates 10510 Scarborough Building Society 7.99 95 Varies All products available 10513 Woolwich 7.89 80 Varies All products available 10512 Figures compiled: 1/11/07. Source: MoneyFacts www.moneyfacts.co.uk Expatriate = UK residents working abroad shor t-term and buying a property in the UK. Lender may allow property to be let. EXPATRIATE MORTGAGES EURO MORTGAGES OVERSEAS PROPERTIES Nationwide comments on the possible effects of the credit crunch on the mortgage market Lender Location Fast Facts Barclays Bank UK proper ty 10500 HSBC Bank International UK proper ty 10503 Investec Private Bank UK & international proper ty 10517 Irish Permanent International UK proper ty 10504 Kaupthing Singer & Friedlander UK proper ty 10511 NatWest International UK proper ty 10507 Royal Bank of Scotland International UK proper ty 10510 Currency switching allowed on all major currencies Source: MoneyFacts FOREIGN CURRENCY LOANS All the information on interest rates published in Expat Investor is checked regularly and to the best of our ability. However, rates do change on all accounts sometimes frequently and we advise readers to double check those interest rates which they find appealing before beginning any transactions with the deposit-takers concerned. MOVING RATES price inflation. Whether the fall-out from the US sub-prime crisis will have a more severe impact on the housing market longer term will depend on how long it takes for market jitters to settle. A prolonged financial market downturn would be uncomfortable for the overall economy, given the importance of this sector to economic growth over several years. Such a downturn would not only affect investment bankers, but would also have negative knock-on effects for legal, accountancy and other professional services that have benefited from the structured credit boom. On top of this, jobs in restaurants, cafés and other services catering for city workers would also be affected. The impact on London property prices can only be negative compared to the current situation, particularly at the top end, but employment generated from Olympic and other infrastructure investment, along with supply issues, Fast Facts 10460 will remain positive factors for the mainstream market. The overall extent of any damage to economic growth, and hence the housing market, will depend on the length of the credit crunch and the monetary policy response by the Bank of England. Nationwide's Summer Inflation Report signalled that a rise in the Bank Rate to 6% was pretty much a certainty. But the Bank's forecast of inflation did not predict a dip below the 2% target at any point over the next two years, even based on market rates rising to 6%. So, the fall in inflation to a sub-target 1.9% will have come as a surprise. On top of this, news from Europe suggests that the economies of the UK's main trading partners are weakening, while the likelihood of a slowdown in the States is rising all the time. The MPC has been highlighting the strength of global and Eurozone growth as a factor supporting its tightening campaign. This, together with the softer tone of the last set of MPC minutes, which revealed that most Committee members "had no firm views on whether rates would need to rise further", has led Nationwide to believe that rates will now remain at 5.75%. The turmoil in credit markets strengthens the case of the doves on the Committee, as the MPC will be reluctant to do anything to add uncertainty while the markets remain volatile. The Bank of England's reluctance to intervene in the markets in the same way as the Fed and the ECB suggests that at the moment it is fairly sanguine about the lasting effects of the credit crunch. But the longer the squeeze continues, the more likely it is to have a dampening effect on the wider economy and hence the outlook for house price growth next year.
January February 2008