Europe's banks welcome foreign home buyers again - guest article by Fiona Watts

by Aaron Strutt

Apr 06 2016

Fiona is the joint managing director of International Private Finance.

The mortgage market available to international property buyers in Europe became significantly more restricted in the aftermath of the subprime mortgage crisis of 2007. The resulting global economic turmoil saw banks throughout Europe’s most popular second home markets – France, Spain, Italy, Portugal – tighten the criteria applied to mortgage applications from foreign buyers

The last couple of years have seen this trend start to reverse, as local lenders start to show more flexibility towards foreign buyers in their countries. While these lending levels have not yet reached the heights of the early 2000s, it is nevertheless becoming easier for British buyers to obtain local financing for their property purchases abroad. Furthermore, with the European Central Bank having cut Eurozone interest rates to 0.00% at the start of March 2016, the current conditions make it a very attractive time to take out a mortgage on the continent.

France still popular with British buyers

For a while now, France has been the most flexible market for British borrowers. Availability is good, with a whole range of lenders keen to welcome new business from international borrowers. Rates are also very appealing, and in some cases have hit record lows. One of the main areas where lenders are still exercising much caution, however, is for new-build properties. The bank’s valuation of the property or development involved is often the key element in getting the application approved.

Traditionally France’s main rival in terms of welcoming international borrowers, Spain’s market was hit worse than most by the financial crisis. Only now are mortgages becoming more freely available to foreign buyers again. The last couple of years have seen some welcome trends: lending appetites are increasing, rates are dropping, and loan-to-value ratios are on the way up. These trends are expected to continue.

In the cases of Portugal and Italy, enduring economic difficulties have meant that the availability of mortgages to foreign buyers has remained low. Portuguese lenders are currently unable to compete with their neighbouring counterparts in Spain, both in terms of appetite for lending and the rates on offer. In Italy, the bigger international banks have largely withdrawn from the market, meaning that the only solution is often to enquire with the regional lenders local to the property in question.

International and private banks

Mortgages are available for international buyers in a variety of other international markets further afield, where the most common solution is to arrange financing with international or private banks. Depending on the country and location involved, these lending institutions may wish to initiate a wider private banking relationship. Such applications will always be studied on a case-by-case basis, with mortgage terms tailored to the profiles of the borrower and property involved.

Contact details

International Private Finance is an international mortgage broker based in London, specialising in financial solutions for British buyers who are purchasing abroad. They have a proven track record in obtaining mortgages for clients in a number of different markets. 

To secure an international mortgage call 020 7484 4600 or email fiona.watts@internationalprivatefinance.com.