Interest rates rumours, currency weakness and post-election pick-up drives mortgage applications up 43 percent

Mortgage applications have increased by 43 percent in the last month, reports deVere Mortgages, with the vast majority of new enquiries coming from overseas buyers.

The findings from deVere Mortgages, part of deVere United Kingdom, which specialises in advising British expats and foreign nationals looking to buy property in the UK, are the consequence of three main triggers.

Mike Coady, Managing Director of deVere United Kingdom, explains:

“On the back of an already month-on-month increase since January, mortgage applications have soared further still – they are up by 43 percent – in the last four weeks.

“The majority of these new home loan enquiries come from Britons living and working abroad and potential buyers from the Middle East, the U.S., Russia and the Far East.”

He continues:

“There are three main contributing factors at play here causing the perfect storm to drive-up mortgage applications over the last month.

“First, sterling has fallen sharply in the last 12 months, having been at USD 1.72 in early July last year, it is today at USD 1.55. This makes Britain less expensive than it has been for those – including many British expats and foreign nationals – who are paid in dollars or in currencies pegged to the dollar.

“Second, there have been recent strong hints from the Bank of England that the ultra-low interest rate era could soon be coming to an end. Indeed, we forecast that the rate could go to 1 percent within 12 months. As such, there is perhaps a greater sense of urgency; people aren’t putting off applying for fixed mortgages any longer.

“And even if rates do rise, buyers are aware that they will remain very low and will not go back to the heady pre-crash rates. There is a new, much lower, normal and this will drive demand over the longer term too.

“And third, there is a greater sense of buoyancy in the market since the general election in May. The post-election uptick was almost immediate. As we reported a week after the Conservative victory was announced, the volume of enquiries increased by more than 50 percent over the seven days following, compared to the previous week.

“Investors seemingly had pre-election jitters and are now forging ahead with applications. The government’s scrapping of the proposed ‘mansion tax’ and excluding of property under a certain value from inheritance tax are likely to be important triggers for growing demand.”

deVere Mortgages, which works with more than 200 UK and international lenders, can assist UK residents and overseas clients with the purchase and refinance of their UK home with a variety of mortgages. In addition to this, deVere Mortgages also specialises in buy-to-let opportunities, re-mortgaging overseas properties and tax optimisation from rental income.