The Greek crisis and UK mortgage funding


While there is much uncertainty as to what would happen if Greece were to leave the Eurozone, there is bound to be a knock-on effect on mortgage pricing and availability in the UK. Some lenders will be more affected than others, particularly those with close links to, or particular exposure in, Greece.

The new capital requirements under Basel III also mean some lenders have been reining back on the amount of lending they are doing. But while some have been raising their variable-rate mortgages, including a number of lenders increasing their standard variable rates, several have announced a reduction in fixed-rate mortgages.

It’s a confusing picture. Falling inflation is taking the pressure off the Bank of England to raise interest rates, while Christine Lagarde, the head of the International Monetary Fund, suggests that a further reduction may actually be necessary to stimulate the weak UK economy. Borrowers may well be asking what happens next and how they should best protect themselves.

Wealthy borrowers from Greece, Italy and France, who are looking to escape the problems or political upheaval in their own countries, are regarding London as a suitable safe haven. Increases to stamp duty announced in the Budget mean many are now buying in their own name and gearing up for tax purposes – something the private banks are keen to help with.

The good news is that there are still lenders who are lending to the right sort of client, particularly the private banks who aren’t over-exposed to the Eurozone. Borrowers with complicated income streams, who rely on bonuses and require interest only, should seek independent mortgage advice. Contact us for further details.

Adrian Anderson
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Adrian Anderson