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The election votes had barely been counted, as the requests to rent high-end properties in London skyrocketed with many Americans unsettled with the result. The new presidency could affect mortgage rates, foreign investment and housing affordability in the UK.
Americans who no longer want to stay in America under Trump’s presidency are requesting by the bucket load to rent ‘trophy’ homes across London with Notting Hill being a particularly popular area. In London, more households rent than own their property.
In the drive up to the election, there were many Americans prepping their property sales and conducting research for potential moves to the UK. With the increase in demand and short supply, London in particular can expect to see a sudden increase in rents again (in December 2021 around 18,000 Americans moved to the UK). Volatility in the GBP / USD exchange rate could influence the attraction of UK property for foreign investors.
It is predicted that the US Election will create a ripple effect on mortgage rates in the UK. It is expected that Trump’s win will lower US gross domestic product (GDP) which has become a reference point for the health of the national and global economies. Trump’s focus to improve the US economy and lower inflation could well impact UK mortgage rates. It is still far too early to see the overall impact, but if the US economy continues to grow it could significantly impact and increase the cost of borrowing here in the UK. The first borrowers to see the impact would be those on a variable rate mortgage.
Lending criteria might become tighter, due to reduced mortgage availability making it more challenging for first time buyers again, but let’s hope not.
After the announcement of victory, European stock markets were up and the US dollar was stronger instantly. In the UK the FTSE 100 Index rose by around 1.5%, but the pound against the dollar dropped by around 1%, meaning it is instantly more expensive for UK travellers to visit the US or import goods.
We just have to hope that the US economy does not grow too quickly, which might force the Bank of England into increasing UK interest rates to keep up with the global economy.
The new presidency is just a reminder that all investors should adapt and adjust strategies in response to any changing market conditions.
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