The group, which has £10bn ($12bn) under advisement, will close its property investment division with immediate effect. It attributed this to inflation worries and the possibility that the Bank of England will continue to increase interest rates.
DeVere’s property investment division consults people on the services and mortgages to use when investing in residential, commercial and mixed use properties, as well as vacant land.
Concerns about the mortgage market
James Green, DeVere Group’s investment director, said the firm was “concerned about the availability of credit and, therefore, an imminent drop in property prices so we are temporarily suspending all property investment projects”.
He added: “We understand many clients around the world will be concerned about current mortgages and protection and, as such, we have put together a dedicated team to assist with these enquiries.”
This follows warnings from credit ratings agency Moody’s and the International Monetary Fund (IMF) regarding the UK’s economic outlook. The organisations raised alarms over the consequences of the government’s Growth Plan, which was announced by the Chancellor on 23 September.
Although a reversal on the plan to scrap the 45p tax rate for high earners was announced this morning, the Bank of England is still expected to increase the base rate to temper ongoing rises in inflation albeit by a lesser margin.
Nigel Green, the CEO and founder of DeVere Group, added: “Bank of England’s chief economist has indicated that interest rates could rise sharply imminently.
“The markets are already pricing in 5.8 per cent by next March. But I would not be surprised if interest rates reach above seven in the spring. Understandably, lenders are suspending mortgage offers and, in turn, we’re now suspending our property investment division.”
Mini Budget fallout
Last week, a number of lenders pulled mortgages off the market while others increased rates in response to the fallout following the mini Budget.
Green said: “A result of the mini Budget is that mortgage prices are set to increase, and borrowers are to have less options. The Chancellor and PM Liz Truss have recklessly gambled with the UK economy.
“The pound, gilt market, the stock market, and now the property market all reacted phenomenally negatively to their plans as the pull away from UK plc gathers momentum.”
He added: “Should you have any concerns on existing mortgage and protection arrangements, please feel free to contact us and we will do our best to help or introduce you to dedicated strategic partners where necessary.”
