In 2004, the overseas mortgage was growing dramatically, with new countries coming on stream in areas which would have never been thought of previously, such as Cape Verde, Dubai and Thailand.
Traditional countries such as Cyprus, France, Italy, Portugal, Spain and parts of the USA – such as California, Florida and New York – were also starting to boom.
What helped the boom was the growing western economy and there was a large amount of new developments coming on board, often with built-in mortgage facilities offered by the developer’s bank. With the added promotion of huge property growth added to profitable rental returns, a false dawn was created, which unfortunately came crashing down at the end of 2007.
The frustration within this sales boom was that with the promises offered above, many people made rush decisions without taking the necessary advice that should have been considered, such as legal, valuation and currency advice.
Since then it has been discovered that a number of projects did not even have the correct planning permissions/building licences OR clients borrowed in currencies that were either not related to their own or were fixed at a rate that has added to the misery of negative equity.
Once the recession arrived, the number of mortgages offered worldwide depleted and those that were available were either at much lower loan to values or at higher interest rates.
Strangely, some countries were not as affected as others:-
- Turkey – as they were not in the Eurozone, continued lending at reasonable loan to values.
- France – due to the size of the market and variety of properties available, lenders were still able to offer 80% mortgages at competitive interest rates, although the interest in Northern France was down as their main buyers (UK and Ireland) were caught up in the recession.
- Thailand – interest from expats based in the Middle & Far East allowed this market to continue to grow.
Also, as high net worth clients were still in the market throughout the recession, mortgages were still available from selected/private banks, plus unique lending schemes provided by a number of lenders allowed repossessed properties to be purchased at knockdown prices (although you had to be careful what you purchased and why it was being sold).
As the world comes out of the recession, mortgage markets are starting to recover, with lending back in the most popular countries mentioned previously (ie: Spain and the USA), but unfortunately some have been hit harder than others with restricted or no lending currently available, such as Cyprus, Greece and Bulgaria.
Others, such as Ireland, Italy and Portugal, are back lending, but with restricted/lower loan to value and higher interest rates compared to others.
The world is also becoming a smaller place, with increased lending now in countries such as Australia, New Zealand & South Africa.
The area which has changed in the last 10 years is the increase of mortgage/lending regulation that now seems to affect all markets and this will restrict the amount of loans that are now available and could affect growth in some areas.
In the future, it would be good to see lending markets opening up in South America and others parts of Africa, where there is a growing interest in holiday/investment properties.