34 | FUNDING ANALYSIS WORDS |OMF & Moneycorp
BUSINESS
www.opp.org.uk | APRIL 2011
Finance data analysis
In OPP’s regular monthly look at what is happening in the international mortgage, funding and fi nancial markets, our expert partners Moneycorp and Overseas Mortgage Finder review the restrictions that the new international banking convention Basel III is imposing on the global lending community, the threat of Jacob Zuma restricting foreign property ownership in South Africa and some new developments in Ireland.
April highlights
• The uncertainly of BASEL III is restricting worldwide mortgage lending. • South African President hints at foreign ownership ban. • 90% mortgages now available in Ireland.
the amount of capital banks have in reserve and to introduce closer supervision of systemic risk at local and international levels. Under the proposed new rules known as Basel III, banks will have to hold top quality capital totalling 7% of their risk-bearing assets, which represents a signifi cant increase from the 2% currently being enforced. A big knock-on effect of these new rules (should they be agreed) is that banks will have to raise hundreds
T
o prevent the repeat of another financial crisis, the G20 is looking to increase
of billions of Euros in fresh capital over the next 8 years in order to hit agreed benchmarks. While banks will not be expected to go from a 2% reserve to 7% overnight, two of the biggest effects these changes could have on mortgage lending are: 1) banks may hold back on the amount of capital they are lending through mortgages so to build up and maintain an adequate cash reserve; and 2) the number of fi xed-rate mortgage products may decrease, as securing such rates on the futures market can tie up more capital. We have already seen the uncertainty surrounding these
Top 10 Countries By Enquiries Country & Position
1 Spain 2 USA
3 France 4 Turkey
5 Caribbean 6 Italy
7 South Africa 8 Ireland 9 Poland 10 Greece
Mortgage Enquiries
12.65% 9.04% 8.43% 7.23% 5.42% 4.52% 3.92% 3.01% 2.71% 2.62%
Monthly chart change
1 1 - - -
4 -
9 1 4
proposed changes has caused some of the more cautious international banks to adjust their mortgage lending policy and pricing strategy over recent months, and other banks may follow suit until an exact policy has been agreed. It therefore may be prudent for property investors to take advantage of low fi xed rate or high loan value
“The number of fi xed-rate mortgages may decrease, as securing them can tie up too much capital”
mortgage deals while they are still being offered by the banks. South African president Jacob Zuma gave a strong indication, while speaking at a recent rally, that he is considering a ban on property ownership by foreign nationals. Zuma and his government are looking to introduce a land redistribution policy in order to help readdress the seizure of black
property under the white minority rule which ended in 1994. In order to have more land available for reform and restitution, the government is proposing land leases be introduced for foreigners, with land ownership reverting back to South Africans. Currently mortgages are available to foreign nationals in South Africa up to 50% loan-to-value with typical interest rates starting at 9%. If the reform does come into effect we are hopeful that mortgages will continue to be available for foreign buyers although perhaps under slightly different terms. Due to cheap fl ights and low property prices, Ireland is fast becoming a popular destination for UK property investors, as evidenced by its steep rise in our mortgage enquiry chart this month. In response to this demand an Irish lender is now offering 90% loan-to-value mortgages for foreign national owner occupiers, at interest rates starting from just 4.2%. Fixed and variable rate mortgages are
Top 10 Countries By Lowest Interest Rate Country & Position
1 Australia - Singapore
2 New Zealand 3 Canada - France
4 Hong Kong 5 Spain 6 Italy
7 Portugal 8 Turkey
Initial Interest Rate
1.59% 1.59% 1.69% 1.79% 1.79% 1.99% 2.31% 2.79% 2.80% 4.05%
Monthly chart change
- - - - - - -
1 1 3
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68