Changes to Santander foreign currency mortgages

Volatility in foreign exchange rates caused Santander to reassess its calculation on exchange rates for its Santander foreign currency mortgage this week, causing the lender to now use the average exchange rate before the Brexit result of the EU Referendum, to calculate foreign currency loans – rather than the current fluctuating exchange rate.

The sterling equivalent must also be calculated and discounted by 25% to allow for further currency fluctuations.

Since the outcome of the EU Referendum, the value of sterling has slumped to a 31-year low against the US dollar, with the future of the pound’s value still proving uncertain.

Following these changes, Santander’s exchange rates for its foreign currency mortgages now stand at:

1.439 – US Dollar

1.276 – Euro

1.385 – Swiss Franc

5.286 – UAE Dirham

The lender has also stated that it will continue to review its plans and position in the market, to ensure foreign currency exchange rates are based on the longer term trend.

In line with this, Credit Suisse has now decided to lower its loan to values (LTVs) on sterling mortgages within prime central London from 75% to 70% for new business.

Credit Suisse UK made the decision to reduce its exposure to the central London property market, citing fears of Brexit as the force behind the decision due to uncertainty within the UK and London markets. In some areas, fears of the effects of the UK leaving the EU has undermined confidence in buyers and property prices and caused foreign investors to remain cautious.

However, the weakening of sterling against the Euro and US dollar, is making foreign investment in the UK more attractive, which in turn is thought to help prevent any big drop in property values.

Despite Credit Suisse’s move to reduce LTVs, it still holds a strong position as many other private banks cap their lending at 60% to 65% LTV.

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