Lloyds has pulled the plug on mortgages for expats, starving overseas property buyers of choice as NatWest is left as the only big player in the market.
Lloyds, plus subsidiaries Halifax and BM Solutions, have stopped lending to expats with immediate effect.
The decision follows an internal review of the mortgage and property market – and includes investment as well as residential loans.
BM Solutions offered buy to let mortgages to British expats wishing to invest in UK property.
The bank had put the brakes on expat mortgage lending in August 2012, but the decision to no longer accept expat applications means the end of funding for overseas customers.
NatWest Offshore is last big player
NatWest Offshore, based on the Isle of Man, still offers mortgage finance to expats, but only to high net worth customers with considerable deposits and resources.
Expat mortgages are for financing UK property purchases for Brits living and working overseas who intend to return to the country – loans for financing the purchase of foreign property are international mortgages, which remain unaffected by the Lloyds announcement.
The British expat mortgage market now is effectively shut – except a small amount of funding from NatWest and a few local deals offered by smaller lenders.
Lloyds will process mortgage applications already in the system, and few customers will be affected, a spokesman explained, as expat mortgages are a small percentage of the bank’s business – less than 1% of all mortgage applications..
“Lloyds Banking Group is undertaking a review of its mortgage proposition for expat customers,” said a spokesman.
Withdrawal is a blow, say brokers
“Whilst this review is on-going, mortgages and further advances will not be available for new applications from expat customers. Existing expat mortgages are unaffected by this review.”
Existing loans with Lloyds are unaffected, the bank confirmed.
Mortgage brokers, who place most loans for expats, consider the Lloyds exit a blow to the market.
Trinity Financial’s Aaron Strutt said: “There were never many lenders offering expat mortgages and Lloyds was often the first port of call for brokers.”
However, Connect Overseas reports an influx of inquiries from brokers with expat clients seeking mortgages.
Head of operations Geoff Simmonds said: “Brokers are reporting that being able to help UK expats has led to an increase in business and many have been surprised by the demand from expats wishing to buy for investment, future retirement back in the UK or to remortgage existing property.”