London - foreign mortgage market

Rates start to ease in the foreign national mortgage market

Those looking to obtain a foreign national mortgage or expat borrowing in the UK are starting to see cuts to mortgage rates, which is welcome news for borrowers.

The UK mortgage market has stabilised some despite recent increases to the Bank of England base rate. Some lenders are cutting their rates as competition grows and inflationary pressures ease.

In the foreign national mortgage market and expat mortgage space, similar patterns have also emerged, including for overseas buyers seeking buy-to-let mortgages. This means investors from abroad are currently able to obtain better rates and have a greater choice of products.

For most overseas buyers, including US investors, there are no legal restrictions to owning UK property. But there are some rules and regulations that investors need to be aware of when securing a foreign national mortgage, and lenders will have various stipulations based on your individual circumstances and residency status.

British expats living abroad, whether in the US, Europe or Asia, will also require a specialist expat mortgage in order to buy property in the UK. But the mortgage options within this space have also been opening up.

How to obtain a foreign national mortgage

For most investors looking to buy UK property, it’s possible and relatively straightforward to obtain a foreign national mortgage through a specialist lender. For those who do not have permanent UK residency, buyers will need to open a UK bank account. They will also have to go through similar credit score checks as British nationals.

Lenders will usually require at least a 25% deposit for foreign investors, but each bank will have their own set of terms for borrowers. Interest rates are also typically higher for foreign nationals or expats than for British nationals living in the UK.

To obtain a foreign national mortgage, it’s recommended to work with a reputable local broker who has access to the best deals and can ensure the process goes smoothly. And it’s important to keep in mind that you may need a UK visa or residency to live in or visit your UK property.

What is happening with mortgage rates?

The Bank of England’s base rate currently sits at 5.25%, which is a 15-year high. The latest increase came on 3 August. This was the 14th consecutive hike to the base rate in order to further combat inflation. Following the latest base rate setting meeting came the news that the annual rate of inflation dropped for the second consecutive month to 6.8%.

With the resilience of the UK economy, many in the industry are predicting we’re nearing the peak of interest rates. This will be welcome news for homebuyers, property investors and borrowers close to remortgaging.

Several high street lenders have been reducing rates, including for buy-to-let mortgages and within the foreign national mortgage market. More lenders are expected to follow suit as competition continues to grow across the mortgage sector.

Offshoreonline is reporting cuts of up to 0.3% to five-year fixed rate expat mortgages for buy-to-let investors. These drops have brought some headline expat mortgage rates down to 5.99%.

Guy Stephenson of Offshoreonline stated: “For the expat looking at the UK buy to let housing market, this could mark an important turning point. Whilst short term tracker and variable expat mortgage rates will rise to reflect the latest UK Base Rate change, longer term fixed rates such as five year fixed rates have begun to fall.

“Onshore, NatWest and other lenders have cut rates and we would hope this will feed into their international mortgage portfolio soon.”

At BuyAssociation, we have been helping international buyers, including US investors, access the UK property market since 2005. Get in touch for details on our current investment opportunities or for more information about how to invest in the UK.

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