26 | FUNDING ANALYSIS WORDS |OMF & Moneycorp
BUSINESS
www.opp.org.uk | DECEMBER 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 discuss the news that mortgage changes in Greece have been put on hold as the country remains in turmoil, that new mortgage opportunities are opening up in Thailand and that the French government continues to confuse the markets.
December highlights
• Mortgage changes on hold following Greek debacle • Mortgages in Thailand now available for foreign investors • French government gives with one hand but takes with another
There is obviously much
uncertainty within the eurozone at present following Greece’s recent decision to hold a referendum, then to scrap the idea a few days later ... only to install a temporary coalition government a few days later, which must now try to fi nd a way to repay the country’s mounting debts. In the wake of this indecision it seems that most banks have decided to stave off any changes to their mortgage rates or criteria until after a more certain picture on (how some, if not all) of the sovereign debt owed to the banks and government will be repaid and what the new monies may be made available to them to lend ... and at what cost. According to fi gures recently released by the Bank of International Settlements, the UK banks hold a relatively small $3.4bn (£2.1bn) worth of Greek sovereign debt, compared with banks in Germany, which hold $22.6bn. The banks in France hold $15bn. A growing concern amongst the EU is that if Greece does default and not repay this debt, will other countries like Portugal, Ireland, Italy and Spain follow suit? There is, however, some current optimism that that new money may be invested by countries outside of the EU - like China - which will hopefully go some way in alleviating the current exposure to these European banks.
There is also a possibility that the ECB may be given licence by the EU commission to print their own money to help raise the funds required to continue to support these indebted nations. Following the latest G20 summit in Cannes, new money has been promised to boost the International Monetary Fund. However, the actual specifi c details behind generating these additional monies is yet to be agreed upon. And, because there are so many
“what if” scenarios in play at the moment, it is hardly surprising that so many banks have chosen to leave their mortgage lending policies unchanged and wait to see how things play out in the next few weeks and months. This can be evidenced by this month’s very stagnant lowest interest rate table (below), which experienced only one rate change.
Also, until recently it has been a real struggle for foreign investors to secure property fi nance in Thailand, with cash or development fi nance being the only two realistic options. There is, however, some welcome news this month for these investors. A new range of mortgages has just been made available for foreign investors looking to buy a property in Thailand, with mortgage lending starting from
$83,000 on interest rates from 5.25% variable (currently there are no fi xed rate products available). Up to 70% of the property’s value can be secured through one of these mortgages and the loan must be repaid in US dollars over a term up to 20 years.
Although it is early days, it is our belief that other funding sources may follow suit and enter this market over the next 12 months. As there has been a marked increase in foreign buyers in Thailand since recent elections went off peacefully, with notably easing tensions in the country.
There also looks to be a likely relaxation of rules regarding foreign ownership of property in Thailand, which has long been regarded as one of the major reasons behind the lack
Thailand | is opening up its mortgage market to investors from abroad seeking good returns in places like Bangkok (above)
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