Overseas owners remortgage to cut sterling debt

International Private Finance says the number of owners remortgaging their overseas properties to cut their UK debt doubled between April and December 2008.

In its mortgage outlook for 2009, the international property broker says it expects the 2008 trend to continue as sterling strengthens against the euro and interest rates fall.

It says the plunging euro/sterling exchange rate has meant that those who bought property abroad in the past 10 years using equity released in the UK have been looking to raise funds in euros to cut their sterling debt.

But it also found international lenders upbeat about sterling, with some 78% predicting the euro/sterling exchange rate will be 1.25 by the end of 2009. It was 1.08 at the time of going to press.

IPF surveyed 20 of Europe’s most active international lenders on their attitude to non-domestic lend-ing in 2009. Most predict that sterling’s buying power will return to its historic average.

The survey also found that 80% of lenders expect to maintain or increase their lending to non-resident borrowers. Of these, 90% expect to maintain or increase the number of products available.

Fiona Watts, managing director of IPF, says: “With interest rates falling, expectations that the exchange rate will improve and a strong appetite for lending, the outlook is positive.”