HSBC, dubbed the 'go-to lender for international buyers', has shortened its list of approved countries for mortgage applications, leaving some brokers worried they will lose business.
Unlike other high street lenders, HSBC does not require international buyers to pay different rates to domestic buyers when they’re taking out a mortgage in the UK.
But from September 29, the bank notified brokers it would only be approving mortgages for buyers from nine countries - Australia, Guernsey, Hong Kong, Isle of Man, Jersey, Singapore, Switzerland, United Arab Emirates, and the US.
This saw the removal of Saudi Arabia, Russia, Qatar, Taiwan, France and Greece. Buyers in these countries can still get a mortgage in the UK, but they now have to own a visa to live or work in the country.
“It’s gone under the radar,” Aaron Strutt, product and communications director at brokerage Trinity Financial, told FTAdviser. “Ultimately, we’ll lose business off the back of it”.
He continued: “Especially in the London market, international buyers are an important part of a broker’s income. A lot of brokers in London will have found this frustrating, with HSBC being the go-to lender for international buyers.
“Clients will now have to pay a premium, or go to international banks - which means they’ll need to be relatively well off.”
Stuart Marshall, director of Liquid Expat Mortgages, said the North West was also a favourite for UK expat and foreign national investors.
“This may be to do with the incredible regional growth that we see in the North West,” he explained.
“So, many UK expat and foreign national investors are favouring the North West because, in effect, you’re earning twice on your investment – once from the rental yield and once from the capital growth.”
As well as individuals, foreign companies have also been capitalising on the value of the UK property market. In July 2020, AIMS Investments - part of the diversified, family-owned Saudi conglomerate AIMS Holdings - acquired a majority stake in Manchester developer Beech Holdings.
Broker Strutt was therefore surprised by HSBC’s decision to curtail its approved country list, after seeing what he described as a “real push” to get business in by introducing new income stretches and more buy-to-let mortgages. “We’re unsure how long it will last for,” he added.
A spokesperson for HSBC told FTAdviser: “Reducing the countries on our approved list for mortgage applications is a temporary pause not a permanent removal. This is a business decision and not regulatory or Brexit related.”
Another broker, who would prefer not to be named due to the amount of work they do with HSBC, told FTAdviser: “It’s terrible. I’ve got lots of clients with income from overseas. [HSBC’s] list is getting shorter and shorter.”
HSBC said existing applications are being processed as normal. But the lender expects the volume of new business from these removed countries to be “extremely low”.