Expat Brits with 40% deposits paying more for BTL mortgages

Expat Brits buying BTL with a 40% deposit are now paying more for their mortgage than those putting down 20%, according to mortgage broker FORTO Finance.

The first iteration of the FORTO's expat mortgage monitor found that on 28th September the rate for an expat BTL mortgage at 60% LTV stood at 5.89%, compared with 5.7% at 80% LTV.

The 70% LTV rate was higher still, at 5.99%.

The reversal happened in a single week. Between 14th and 21st September, the 60% LTV BTL rate rose by 82bps and the 70% LTV rate by 80bps.

Over the same week the 80% LTV rate rose by just 1bp.

For most of the quarter the 60% LTV band had been the cheapest BTL reading on the index, falling as low as 4.96% in late August.

The jump came as swap rates climbed above 4.7% and the major high street lenders repriced their fixed-rate ranges twice in September in the face of renewed inflation fears over the conflict between the US and Iran.

On 17th September, the Bank of England held Bank Rate at 3.75%, with three of the nine members of the MPC voting for an increase.

Across the quarter, average residential rates were 5.06% at 60% LTV, 5.16% at 70% and 5.44% at 80%. Average BTL rates were 5.24%, 5.36% and 5.70% respectively.

“Anyone assuming that a bigger deposit guarantees a better rate should check with a broker before committing,” said Anthony Curtis, director at FORTO Finance (pictured above).

“This is actually a weird quirk of a very specialised market; the large fees involved with some of these products mean the low headline rates don’t tell the whole story.”

Esmé Rook, operations manager and paraplanner at FORTO Finance, added: “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.

“A good broker, specialising in this corner of the mortgage market, will know which lenders are genuinely engaged in any given month.”