Overseas clients and the High Net Worth mortgage market

Overseas clients and the High Net Worth mortgage market

Chris Lloyd

As important as it is to observe trends and patterns through your own company’s performance, it is reassuring to receive affirmation from other sources that you are on the right track and that similar behaviours are playing out elsewhere. This has been particularly true in terms of the number of offshore clients we have dealt within the first quarter of 2012. Overseas clients and the high net worth mortgage market is a match made in heaven.

Such borrowers have long made up a sizeable part of our volumes, but the spike in the first three months of this year has been significant. Foreign and offshore cases now account for 52% of our business volumes and the average loan size they are seeking (£2.8m) dwarves their domestic counterparts (£2.2m). While part of the reason for this influx is a concerted effort on our part to develop relationships with family offices, trust managers and wealth managers overseas, it is also symptomatic of the uncertainty that pervades much of the Eurozone and beyond and the high regard that prime London property is still held in.

These sentiments have been echoed by other brokerages and property agents, with Savills reporting a surge of interest from Greek and Spanish investors, in particular, seeking a safe haven for their money. It has claimed that the number of Greeks searching for homes costing more than £1.5m jumped 39% in April compared with the average for the preceding six months. Interest from Spanish buyers grew by 14% over the same period.

Knight Frank is another keen observer of such trends and its own research indicated interest from other parts of Europe was also keen, with a 153% year-on-year surge in searches from Portugal and a 46% spike in Italian traffic.

In addition to countries afflicted by the Eurozone crisis, there remains a high level of interest from Russia, the Middle East and the Far East. The former has long had a reputation as a heavy investor in property in the capital thanks to high-profile buyers such as Chelsea owner Roman Abramovich, but borrowers from the second region are becoming just as common at present. Europe may have been blighted by economic uncertainty, but in the Middle East, it is the political unease that has caused problems.

Some banks are becoming increasingly uncomfortable lending to clients whose money originates from countries where there has been such unrest and as a result, a number of perfectly legitimate clients from these countries have been affected. We recently helped a Libyan client who had experienced difficulties with his private bank and needed to refinance his London residence and I’m sure there will be a number of similar cases as the sensitive situation rumbles on.

The high net-worth mortgage sector has been able to pretty much carry on regardless as the mainstream market lurches from one drama to another, but this may not have been possible were it not for the influx of interest from overseas, both in terms of investors and the institutions stumping up the cash. Read more about overseas mortgages.

The UK economy may have taken something of a pounding over the past five years, but we should take some encouragement from the fact that our reputation among our European and global peers as a relatively safe haven for investment and an aspirational destination to own property, has not.