Mortgage applications up by 43%, research finds

Research from deVere Mortgages has found that mortgage applications have gone up by 43% in the last month. The vast majority of these new enquiries have been from overseas investors.  

Part of deVere United Kingdom, deVere Mortgages specialises in advising British expats and foreign nationals looking to buy property in Britain. 

“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,” Mike Coady, Managing Director of deVere UK, explained. “There are three main contributing factors at play here causing the perfect storm to drive-up mortgage applications over the last month.”

The first of these three main triggers is the sharp fall of sterling against the dollar. “Having been at USD 1.72 in early July last year, it is today at USD 1.55,” Coady said. “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.”

Secondly, there have been strong hints from the Bank of England in recent weeks that the period of low-interest rates – they have been fixed at historic lows of 0.5% since 2008 – could be coming to an end by the end of 2015. Coady believes they could rise to 1% within 12 months. This means there is a greater sense of urgency among buyers, eager to get in before the interest rate rise is implemented. 

“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,” Coady went on. “There is a new, much lower, normal and this will drive demand over the longer term too.”

The third trigger, according to Coady, is the 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 per cent over the seven days following, compared to the previous week.”

Investors experiencing pre-election jitters are now ploughing ahead with their applications, further encouraged by 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.”