An interest rate increase in November looks as if it will become a self fulfilling prophecy. As in June/July so much talk was of a Bank of England increase that the August increase came as no surprise – this may well be repeated next month with another .25% rise to 5.0%. Viewed in the longer term is this the disaster the tabloids will splash in their headlines. - Of course not!
In March 2000 building societies standard variable rate stood at 7.74% the anticipated hike would take it to 7%, Bank of England base reflects those rates – 6% in March 2000 and 5% next month if forecasts are correct.
Many lenders have already factored in an increase in their pricing – they want the certainty of fixed rate business on their books but they also have to balance this with variable rate business.
Only the ignorant, indolent or disadvantaged should have to pay standard variable and the flexible options lies in discount or tracker rate loans. Certainly 4.99% looks an attractive rate right now whether fixed, discounted or tracker. Should the borrower be looking to fix for 2, 5 or over 10 or 15 year terms, longer fixed term offers are now becoming commonplace – 2 years ago despite their promotion by Gordon Browns they were scarce and rejected by the public.
Lenders will always take periods of interest rate change as a good excuse to lock new borrowers into them. At International Mortgage Plans we have always believed in the virtues of flexibility – rate is very important, but the ability to divorce a lender whose lending terms competitiveness diminishes can be just as important.
Expatriates often overlook the true interest rate after taxation when making their calculation. An expat borrowing £100,000 @ 4.99% has a month one payment amount of £415.83 but by offsetting this against rental income the true rate for borrowing is greatly reduced. After tax relief the equivalent rate is 3.89% - a rate readily beaten by investing in offshore savings accounts.
A new game in town for lenders is to highlight low interest rates to access “best buy” tables but to sock it to the borrower with conditional high arrangement fees. Two years ago people would have laughed at an arrangement fee of 1.5% they are now becoming commonplace. Northern Rock has launched a 3.99% fixed rate with a huge 2.5% arrangement fee – at IMP we prefer the old fashioned honest pricing through rate rather than these “add ons”.
Entering the traditionally quiet Xmas market the opportunity will be there for expats to take advantage of temporary favourable offers from lenders looking to balance their year end books – it happens every year both in terms of property purchase and refinance. We are now about to enter an artificial buyers market where expats will find mortgage terms very much in their favour.
Mortgages are a moving target – specialised independent advice is essential. IMP negotiates constantly with established or potential new lenders and for 20 years have proven performance. Our Xmas/New Year offering to existing buy to let expats refinancing buy to let property or purchasing is our exclusive expat buy to let product funded by the Stroud and Swindon Building Society. Discounted by 2.3% for three years the current rate is 4.99%. The mortgage features are that it is interest only, flexible without any kind of repayment penalties at anytime. As with all our loans there are no types of conditional insurance required. We believe this product to be unbeatable in the expat market place.
For good measure a special remortgage rider has now been added offering the same rate albeit for 2 years rather than 3. Counterbalancing this is a free valuation and freedom from legal transfer costs. Stroud and Swindon fee is a mere £395 (£695 for the fee assisted deal) – no 1.5% fees here.
For expats purchasing their first buy to let property we have a large range of lenders and will look to find you the best deal for your particular circumstances.
For further details on our financing and refinancing schemes please see our website, www.international-mortgage-plans.com or e-mail us at firstname.lastname@example.org or call us on 00 44 1932 830660.
International Mortgage Plans are regulated by the Financial Services Authority, registration number 302775
We hold consumer credit licence number 504524
Buy to Let mortgages are not subject to the new regulatory regime