myi: How has demand for overseas mortgages performed since the peak in 2007/2008?
The overseas mortgage market, although having to adapt to challenging times, is alive and well. Demand has declined, unsurprisingly, since the peak in 2007/2008, but it’s steady.
The proportion of prospective buyers progressing from the quote stage to the go ahead stage, however, has actually increased, suggesting that buyers are becoming more serious about their intended investment.
myi: Who is buying overseas property?
There’s still a mix of buyer types, but the majority tend to be over the age of 40, and are quite affluent. In the current economic climate, they’re sticking to the more traditional overseas locations, especially those with history of providing good rental returns.
And they’re not simply looking to where the best bargains for a swift return can be found, but to where security lies for a longer term investment.
It could well be that an introducer’s existing portfolio of clients includes several who fall into the overseas mortgage market; such as people who are planning to retire abroad or to live permanently overseas, or those who are interested in investing in property, but who may not yet have considered foreign opportunities.
It’s also crucial to remember that there are many people who already own property abroad, who may not have considered remortgaging, or thought it necessary.
myi: Which countries are generating the most interest?
Based on the enquiries we’ve received in 2011, France remains the top location, accounting for just under half (45%) of quotes issued. Second is Spain with 28%, and Turkey is third with 11%. Portugal, Italy and the USA are also popular.
It’s clear that investors are favouring the tried and trusted locations when it comes to overseas property. But they also want easy access, good rental opportunities and security with price appreciation over the long term.
Conversely, the flurry of interest we saw in the far-flung emerging markets a few years ago seems to have totally disintegrated
myi: How easy or difficult is it to secure overseas finance in the light of the global financial crisis? What kind of deals are currently available?
Despite the turbulence unleashed on the UK mortgage market by the global banking crisis, overseas mortgage providers have a healthy appetite for lending to foreign investors. Just how easy it is, however, depends on where your clients want to buy.
Despite the global economic crisis, the French mortgage market has emained very calm, primarily due to its financial system having been more cautious in the past.
It offers the most finance options and best available rates in Europe for UK buyers at the moment.
Its loan to value ratios are still high and it’s quite normal to be able to borrow between 70-90 per cent of the value of a property, and in some cases, it’s even possible to get a loan without putting down a deposit. Rates currently start from just over 2 per cent.
In Spain, mortgage availability is surprisingly good, despite the negative headlines about its property market. Maximum loan to values are still around 65-70 per cent. Rates currently start from around 3 per cent, with repayment deals prevailing.
The Spanish banks now own a lot of repossessed properties, so are offering some attractive rates in order to get these off their hands.
In Turkey, it’s possible to borrow up to 80 per cent, and considering that the country didn’t even offer mortgages until 2007, availability is generally very good. Lenders tend to prefer shorter terms though, with 10-15 years being quite typical, and rates start from around 4 or 5 per cent at the moment.
In Portugal, you can still generally borrow up to 70 per cent, but lenders have reduced their mortgage portfolios, fixed rate deals have become rare and margins have increased.
The country may be struggling with debt, but it has managed to escape the type of property crash experienced by Spain, due to its tighter lending conditions and stricter planning laws.
So although things are difficult here at the moment, I expect mortgage availability to start improving again soon.
While there have been concerns that the eurozone debt crisis is spreading to Italy, mortgage rates have remained largely unchanged and currently start from 3.4 per cent.
And although its range of products had shrunk significantly in size over the last few years, it’s growing again, and it’s now possible to borrow up to 80 per cent of the value of a property.
myi: How lucrative a market is this for introducers?
According to recent media reports, the eurozone debt crisis is scuppering UK buyers’ hopes of securing an overseas mortgage.
But bargain prices and low interest rates mean that buying property abroad may never have been more affordable. If introducers haven’t yet considered the overseas mortgage market as a new source of income, it’s a good time to do so.
There are plenty of British buyers taking advantage of the property bargains available abroad, and they’re more willing to explore overseas opportunities in their search for better potential returns on investment than they’re achieving in the UK.
Commission rates start at 25% per case, but higher levels can be achieved when volume increases or through membership of a qualifying group or network.
Conti can advise introducers individually on what rate will apply to them.
