Banks target cashed-up expats

CASHED-UP Australian expats living in Europe are being offered special mortgages to buy property back "home".

Banks target cashed-up expats

CASHED-UP Australian expats living in Europe are being offered special mortgages to buy property back "home'' as the big four banks combat the lowest domestic home loan affordability rates in more than two decades.

In the past, Australian banks have focused their expatriate mortgage services on Asia, but now recognise high disposable incomes in the UK and higher value foreign currencies can provide a niche boom in off-shore home loans.

Offshore mortgages can be set in the foreign currency earned, such as British pounds or the euro, with loans based on interest rates set by their respective central banks.

In the current environment, those foreign interest rates for repayments are lower than loans based on the Australian dollar.

ANZ has now joined the Commonwealth Bank, NAB and Westpac in operating a London-based one-stop-shop expatriate mortgage service, targeting Australians who want to invest or are considering returning to Australia.

ANZ Expatriate Mortgages associate director David Laird said yesterday that in just a few months, the niche market had proved a success, with a number of prospective home loan clients utilising the loan run through a different currency.

"There can be both potential benefits and risks in cross-country loans, so we work closely with customers to ensure they're choosing the right loan for their needs, and help them develop strategies that are designed to manage any potential risks,'' Mr Laird said.

Officially there are an estimated 320,000 Australians and New Zealanders living and working in the UK, although there is evidence to suggest the number could be as high as 750,000 when including dual passport holders.

A spokeswoman for CBA's London operation, which was the first to target expats in the UK in 2005, said yesterday the entry of another bank into the niche market only served to ensure better deals were being offered to potential customers.

"Most young Australians still have the dream of purchasing their own property, and those lucky enough to be earning very good money in the UK are keen to build a property portfolio,'' the spokeswoman said.

"The benefit of purchasing a property while you are still working offshore is that those repayments don't seem as ominous when you are earning your income in British pounds.''