As the EU referendum looms, Liquid Expat Mortgages explore the likely consequences of Brexit for expat investors and specialist lenders.
22nd March 2016
With just three months until the EU referendum, intention polls show that opinion could swing either way in the run up to 23rd June. As the odds close in, many expats are considering the impact that Brexit would have on their investment portfolio, particularly those who are planning to take out expat mortgages over the coming months and years.
The Benefits of Brexit
Whilst Brexit would certainly pose a shakeup to European politics, it is unlikely that Britain leaving the EU would have any negative effect on the expat mortgage market. In fact, by freeing the UK market from current constraints of compliance, it should encourage more lenders to enter this specialist market, giving expats greater access to finance and making the market more competitive.
Currently, only major banks and building societies can afford to carry the costs of tightening regulation driven by EU directives. The European Union Mortgage Credit Directive (MCD), for example, has already pushed at least two expat mortgage lenders out of the market.
Business As Usual
However, the MCD is designed to protect expats, so in the long run will continue to act in the interests of expat investors. Where currency fluctuations pose a risk to investors, banks and building societies must inform their borrowers, to help them understand and resolve the risk. And because the MCD affects anyone who is taking out a mortgage in another currency to their main income, it will be business as usual regardless of whether Britain stays in the EU.
“Despite fears surrounding the possible impact of Brexit on the market, our research shows that many of these are unfounded. Expats could benefit from more choice when securing finance in the future, should MCD compliance measures no longer affect UK lenders,” says Stuart Marshall, Director of Liquid Expat Mortgages.
As independent expat mortgage brokers, Liquid Expat is helping several building societies interpret the rules of MCD, and reassuring investors that leaving the EU will not negatively impact the market. Conversely, it’s more likely that Brexit could have a positive inference, by opening up the market to more competition.