Expat Mortgage Experts - Latest
News Feb 2010
“A LOW, DISHONEST DECADE”
W H Auden was referring to the ’20’s but the limply named ‘noughties’ are
probably more apt. David Cameron let his easy target off lightly when he said
recently that a ‘vein of dishonesty ran through the Labour Government’- more
like a motherlode.
Obama was 2009’s brightest hope and he probably deserves an A- for his efforts.
Can Cameron emulate his ‘success’ – Britain desperately needs it. Unelected and
surely unelectable Gordon ‘the Moron’ Brown must have caused Britain more harm
than any leader in history. His slippery predecessor Tony Blair will hopefully
squirm in front of the Iraq war enquiry – many regard his misleading the nation
over the reason for going to war criminal. The needless deaths of British
soldiers and the maiming of so many will give him and Brown sleepless nights.
With apologies to Kipling who knew all about Afghanistan, - “when they ask you
why we died – because our politicians (fathers) lied”! Our feeble UK border
controls and loose immigration policy are not helping at all in the war against
terrorism. Little ‘mincing’ Lord Mandelson, the arch exponent of the ‘liars
mortgage’ continues his Machiavellian self serving scheming. It’s doubtful if
any of the three could tell the truth if they were hanging from a rope! Roll on
the election.
INVESTMENT
2010 will probably be at best a year of ‘flatlining’ with caution the best
watchword. William Hill’s go 10 -1 the FTSE to be under 5000 next New Year, and
10 -1 over 5000 – not a bad each way bet. In investments 2009 was to most
people’s surprise a very good year. Perhaps due to relief at the ‘survival’ from
the banking crisis, the FTSE showed positive growth over 20% over the year and a
massive 50%+ in the six months April to October – timing is all! European
markets reflected the same yearly trend, France and Germany matching the UK. In
the Far East, Shanghai and Hong Kong registered 80% and 50%+ gains. ‘Irrational
exuberance’!? How much has been due to quantitative easing (printing money)?
George Soros warns of a double dip recession – he’s not always right but he is a
better judge than most
MORTGAGES
Flatlining the word here too. Our greedy bankers having ungratefully swallowed
tax payers millions have concentrated on rebuilding their balance sheets and
show no inclination to help the homebuyer. A 40% deposit is needed to secure the
best mortgage deals of c.3%. 25% down, a common limit, will secure rates in the
high 3’s or low 4’s. Anything under a 25% deposit and funding will be
disproportionately expensive ensuring the ongoing use of the ‘Bank of Mum and
Dad’.
The average two year fix stood at 4.99% last month; three year fixes 5.59% and
five years an eye watering and criminal 6.15% - against a steady base rate of
.5% with little likelihood of much change in 2010. Expatriates remain
disadvantaged and our recent A-Z of Expatriate mortgages follows this briefing
on our website as little has changed in available terms. On a positive note,
hundreds of our clients are benefiting from Nationwide’s enforced largesse of
rates of 2.5% or lower. Fixed and discounted deals struck via IMP with the
Portman and Lambeth Building Societies sadly taken over by the giant Nationwide
have ‘defaulted’ to tracker or SVR deals with that lender. However Nationwide’s
negative approach to expats means that mobility is restricted as they will not
be given new borrowing if trading up (or down) on let properties and further
advances are limited to essential home improvements.
CURRENCY MORTGAGES
IMP have never favoured these arrangements but can offer them through several
international banks. There were reports in 2009 of heavy losses incurred via
loans arranged with leading currency managers whose schemes already ensure a
poor start via excessive setting up and administrative charges. Since launch in
1999 the once mighty Dollar has declined against the Euro by 30% - in the same
period it is virtually level with the Pound at their 2000 position – two weak
currencies now!
HOUSE PRICES
Confounding the prophets of doom, as with the investment markets, 2009 turned
out better than hoped for most sellers and buyers. Low interest rates, a
shortage of supply and the strength of foreign and cash buyers meant London
property prices firmed and this spilt into adjacent areas. Nationwide and
Halifax continued to publish reports on typical houses (what they?) with
positive growth of 5/6% over the year. Leading agents, Savills, Cluttons and
Knight Frank forecast movements in value in 2010 of -2/-6% in general and -1/+3%
for London respectively. As to Nationwide’s ‘typical’ house, who knows and there
are still areas of the UK – city centres particularly, where the over supply of
recently built investment property will ensure negative performance for years to
come. Expats in particular have fallen foul of the carpetbagging activities of
developers and their agents – they never seem to learn! There’s good news from
the council of Mortgage lenders – forecasts for repossessions ‘trimmed’ from
75,000 to 48,000 for 2009 – obviously the same school of research as Brown and
Darling’s
DUBAI – “BUILD IT AND THEY WILL COME”
So they did – transforming a strip of sand into an ultra modern city with the
biggest, tallest and most ostentatious buildings in the world. Unfortunately
recent events have shown cynics to be right in their believing that all was
based on shifting sands via a debt fuelled unsustainable development binge. As
the UK Government‘s lady commentator said after the Twin Towers disaster “today
is a good day to bury ‘our’ bad news”! Sheikh Mohammed chose the four day EID
holiday to cover his announcement of one of his government’s main development
company’s inability to repay their debts on time. It also coincided with the
UAE’s National Day, putting further pressure on ‘big brother’ Abu Dhabi’s need
to rescue Dubai and possibly the entire region from the results of Dubai’s
excessive hubris. Debt default in Dubai usually means a jail sentence – It’s
unlikely the corporate version will entail the same penalties. Just a week
before the announcement Sheikh Mohamed had received the congratulations of
Gordon Brown on his leadership of Dubai’s recovery from the global recession.
With Brown’s own record we should have feared the worst then!
Undoubtedly there will be an element of schadenfreude on the part of Dubai’s
less glamorous neighbours and others around the world. Of course those geniuses
of the UK’s banking have been at the forefront in fuelling Dubai’s excesses –
HSBC, Barclays, Lloyds, Standard Chartered and, no surprise, the ubiquitous
Royal Bank. Regular visitors have been aware for some time that all was not well
in ‘Dubailand’.
Emirates pilots seeking unemployment insurance, cars left at the airport by
owners fleeing from the threat of debtors prison should have engendered caution.
At IMP we have seen a significant increase in applications from families where
husbands will stay on but are arranging for wives and children to be relocated
and seek or retrieve housing in the UK. W S Atkins have shed nearly a third of
it’s Dubai workforce and are owed substantial sums. Carillion have relocated no
less than 5,000 of their staff to Qatar, so they have long anticipated Dubai’s
difficulties. Dubai is and will be for the foreseeable future dependent on the
largesse of Abu Dhabi whose massive supplies of oil will support their cousins.
However, Abu Dhabi can be expected to exact a price and some of the more
outlandish developments will be allowed to fail. It is even rumoured that Sheikh
Mohamed’s prize jewel Emirates Airlines could be vulnerable to takeover or
merger with Abu Dhabi’s new national carrier Etihad. The renaming of the world’s
highest building Burj Dubai to Burj Alkhalifa (Abu Dhabi and UAE’s President)
rumoured for weeks could be just the start!
We hope you have a happy prosperous and most of all healthy New Year. Call, fax
or email if we can help with any of your financial arrangements. Keep abreast of
mortgage term changes and other property related matters via our web site
www.international-mortgage-plans.com
Adrian Wright
8th January 2010
Mortgage Enquiry Form
Back to IMP Homepage |
