intl mortgage market brokers surprised by Lloyds

Added 7th November 2012

Lloyds has surprised advisers and international mortgage brokers with the news that as of tonight at 8pm, it is suspending the offering of new mortgages to expats seeking to buy properties in the UK.

intl mortgage market brokers surprised by Lloyds

The news comes weeks after the bank quietly discontinued offering international mortgages to expats in other markets, and four years after it was bailed out by the UK government, leaving it 41% owned by UK taxpayers.

A spokeswoman for the banking group stressed that the suspension of both the UK and overseas international mortgage services was taking place while a review of Lloyds “mortgage proposition for expat customers” was undertaken, and did not necessarily mean the bank was leaving the market altogether. 

"While this review is ongoing, mortgages and further advances will not be available for new applications from expat customers,” the spokeswoman added, in a  three-sentence emailed statement, issued in response to a query.

“Existing expat mortgages are unaffected by this review.”

The service being suspended today is one that accommodated expatriates interested in buying UK properties with mortgages, on the understanding that they would return to the UK to live in them within three years.

In addition to Lloyds mortgages for expats, similar mortgages for expats offered by Lloyds-owned BM Solutions, Lloyds Spearhead and the Halifax are also being suspended, market sources said.

‘Major player in int’l mortgages’

While international mortgages represent a relatively small proportion of the giant bank’s business – one estimate placed it at less than 1% of all Lloyds’s mortgage applications – Lloyds was nevertheless considered a major player in the market for offshore mortgages.

"They were the biggest by far," said one mortgage broker, adding that it was particular strong in the Hong Kong and Singapore markets, which is why he suggested the bank may be planning to sell off the operation and its book of business to one of that region's fast-growing banks.

"HSBC is probably the biggest one now, although they don't deal with intermediaries; Barclays Wealth is also up there."

Lloyds's multi-currency mortgages in particular were said to be useful for  individuals seeking to buy properties in currencies different from the one in which they were paid.

In addition, said Simon Conn, a Sussex-based international mortgage broker, unlike many other lenders, Lloyds offered “a much more flexible-type of lending to high-net-worth clients, and understood that market”.

"The problem you are now facing is that although you’ve got alternative lenders in some of these countries – France, Spain, Portugal, etc – they are not always as up-to-date or flexible in their understanding of high net worth clients, who also happen to account for a large percentage of the people buying properties abroad.”

As reported earlier this year, Lloyds claims to have been providing mortgages for international property purchases for more than 30 years, which, it noted at that time, was longer than any other major UK bank. It also claimed to offer mortgages to clients in more countries than any of its rivals.

'Not the first time'

Conn, who himself has been in the international mortgage market for at least 30 years, noted that this is not the first time Lloyds has pulled out of the market.

"They may have been around for 30 years, but they have pulled out of [the international mortgage business], and come back in, before. 

“When I first started dealing with them in Spain, back in the early 1980s, they owned a South American bank down there, and then they pulled out, and then they came back in.

“Now, of course, it’s big business in the international markets, and in the UK, and so a lot more people are aware of it.”

With the exodus of Lloyds, Lloyds Spearhead, the Halifax and BM Solutions from the international mortgage market, expats are likely to struggle to find mortgages to suit their needs, and when they do, they are likely to pay more for them, Conn added.

Both Conn and Adrian Wright, of International Mortgage Plans, a Surrey-based specialist with a knowledge of the international mortgage market, believe the exodus of Lloyds will mean more potential clients coming their way, as IFAs and individuals in search of international mortgages seek help.

"We're going to be frantic," Wright said. "In fact, the enquiries have already started." 

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