Expat Property Finance: UK Mortgage Rates, Bridging AVMs and Stamp Duty Changes

#314

UK mortgage rates are rising even as the Bank of England holds. 

Bridging lenders are embracing automated valuations. 

And a potential overhaul of stamp duty and council tax is being discussed at government level.

In this month's Mortgage Monday, the Expat Property Guy and Shaz Ahmed of Elan Property Finance unpack what's actually moving in UK property finance right now.

And what it means for expat and overseas investors (and UK based investors too!

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We discuss:

Bank of England holds at 3.75% — but mortgage rates keep climbing

The MPC voted 6-3 to hold the base rate at 3.75%, with three members pushing for a rise to 4%. 

That's a shift from last month, when only one member voted for an increase. 

Shaz explains why this matters: swap rates — not the base rate — drive mortgage pricing, and they've been creeping up due to sticky inflation, higher funding costs, and geopolitical uncertainty. 

Several lenders pulled products this month with little notice, repricing upward by around 0.25%. 

The Bank of England base rate and your mortgage rate are not as connected as most people assume.

If you're weighing whether to fix now, Shaz's view is that rates are more likely to rise before they fall — and when they do eventually come down, history suggests they won't return to previous lows.

Mortgage approvals are up — but the market still feels sluggish

Bank of England data shows mortgage approvals increased in June. Lenders have money to deploy and they need to lend it. 

But affordability pressures, cost of living, and slower conveyancing mean many buyers are hesitating. 

Residential brokers are busier, but chains are taking longer.

Lenders are getting creative — including 100% mortgages

Banks and building societies are relaxing affordability rules and packaging products differently to help buyers onto the ladder. 

At least one lender has launched a genuine 100% mortgage for residential buyers. Shaz's view: the risk of negative equity in the current market makes this a concern worth taking seriously, regardless of what lenders say on paper about affordability.

Mortgages cheaper than rent: Middlesbrough, Burnley, Merthyr Tydfil

A recent analysis found mortgage payments are cheaper than rental costs across significant parts of the UK. 

The top three locations: Middlesbrough, Burnley, and Merthyr Tydfil. 

The catch, of course, is the deposit. The bank of mum and dad remains one of the UK's largest lenders.

Stamp duty and council tax: could they be replaced by an annual property charge?

While it's only a proposal at this stage, it's gained enough traction to be worth understanding. 

The idea: replace stamp duty and council tax with an annual charge of 0.48% of property value for residential owners, and double that for investment properties. 

For landlords, that increased cost is likely to flow straight through to tenants.

The conversation also covers the parallel proposal to align England's conveyancing process with Scotland's earlier exchange system — reducing gazumping, speeding up chains, and giving both buyers and sellers more certainty earlier. 

Shaz confirms that Scottish transactions do move materially faster.

Bridging finance: automated valuations are changing the speed and cost equation

One of the most practical updates in this episode for active investors: bridging lenders are increasingly comfortable with AVMs — automated valuations based on Rightmove and public data — rather than requiring a full physical survey. 

The difference is significant. A physical valuation can cost up to £1,000 and take two weeks. 

An AVM costs around £35 and turns around in a day. Lenders may request internal photos to confirm the property isn't a building site, but the direction of travel is clear.

The 6-month refinancing rule: it's not as rigid as you think

A question Shaz gets regularly from newer investors: do I have to wait 6 months after purchase before I can refinance? 

The short answer is no — there are now enough lenders, at competitive rates, who will refinance within 6 months of ownership at full value, provided you have evidence of works carried out: invoices, schedule of works, bank statements.

Foundation Home Loans goes further: their written policy allows day-one refinancing for auction purchases bought with cash or bridging, even without renovation, recognising that auction buyers may have secured a genuine below-market purchase.

One important caveat on anti-money laundering: if your deposit came from a private third-party investor acting as an informal bridger, lenders will not be comfortable within 6 months. 

Bridging finance is different — the bridging lender will typically have conducted AML checks on the investor already.