According to Q3 research from mortgage broker FORTO Finance, by 28 September, expat BTL mortgage rates at 60% loan to value (LTV) had risen to 5.89%, compared to 5.7% at 80% LTV. Rates at 70% LTV were higher still at 5.99%.
The brokerage said this quarterly shift marked a significant reversal for a market where lower-LTV borrowing has traditionally attracted the most competitive rates.
FORTO Finance said the change occurred within a single week. Between 14 and 21 September, rates for 60% LTV expat BTL mortgages increased by 82 basis points (bps), while 70% LTV rates rose by 80bps. Over the same period, rates at 80% LTV increased by just 1bps.
Anthony Curtis, director at FORTO Finance, said the unusual pricing reflected the relatively small number of lenders active in the expat mortgage market.
“Expat pricing is set by a small number of active lenders, so a single repricing can move a whole band. That is what happened in the third week of September,” he said.
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Curtis added that borrowers should not assume a larger deposit will automatically secure a lower rate, noting that fees can significantly affect the overall cost of borrowing.
Market ‘wider than it is deep’
FORTO Finance found there were currently 46 lenders offering mortgages to British expats. However, the brokerage said the market was relatively concentrated.
Esmé Rook, operations manager and paraplanner at FORTO Finance, said: “The expat market is wider than it is deep. While there are 46 lenders in the market, there are fewer than 20 that are actively developing their proposition, and many of them are mutuals using manual underwriting.”
She added that specialist brokers remained important in identifying which lenders were actively lending and adapting their criteria.
Product development
FORTO Finance highlighted the range of products that have come to market targeting expat BTL lending.
In August, Skipton International launched limited company BTL lending for non-UK resident directors, while Saffron Building Society introduced new expat house in multiple occupation (HMO) products this September.
Curtis said such launches reflected changing demand among expat investors.
He continued: “The new products are aimed at limited companies, HMOs and holiday lets. That reflects how demand has shifted and influenced the wider expat property investor landscape.
“Expat landlords are more likely to want to hold property through a company and more likely to be looking for yield. Lenders are creating products for those borrowers. The move to 90% LTV on residential lending is the exception, and a welcome one.”
