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Assessing the remortgage surge

23 July 2019

Alan Cleary - Managing Director of Precise Mortgages

The number of people remortgaging has surged in recent months. After hitting a near decade-high at the end of 2018, the trend has continued in 2019. Research by conveyancer LMS found there were 52,560 remortgages in April, with borrowers taking out an average amount of £168,600.

What is the reason for so many people choosing to remortgage? An unprecedented long period of low interest rates, the economic uncertainty caused by Brexit and fierce competition between lenders have all contributed to creating a perfect storm which has resulted in many homeowners deciding to batten down the hatches. With new loans to both movers and first-time buyers remaining sluggish, more people are opting to stay put, often adding value to their existing property by carrying out improvement work.

Taking advantage

There has been real growth in the popularity of longer-term fixed-rate deals as homeowners take advantage of the low interest rates. In a world where the price of everything is going up, there is peace of mind in long-term payment security and knowing that your mortgage payment is the one outgoing that you’ve got some control over.

This is again borne out in LMS’s research, which found that 97 per cent of those remortgaging chose a fixed rate product in April 2019. Not surprisingly, five-year fixed rates were the most popular option, making up 48 per cent of purchases, followed by two-year fixed rates at 34 per cent. Nearly 50 per cent of borrowers also chose to increase their loan size.

Interestingly, the research also found that 65 per cent of borrowers decided to remortgage using the expertise of a broker, a near three-fold increase on the 22 per cent who used a broker to remortgage back in September 2016.

What this highlights is the importance of advice in the remortgage process and the vital role brokers have to play in helping customers refinance their properties. It means there is a big opportunity for brokers to reacquaint themselves with previous customers who are approaching the end of their term and those who have already lapsed onto their lender’s reversion rate. Lenders also have an important role to play by making sure they are designing a range of products to meet customer demand.

With so many people looking to remortgage, it is vital brokers and lenders work together to ensure customers can access products that help them save money and release cash they have built up in equity in their property. Brokers should make sure lenders know all of their customer’s information from the very start of an application to ensure the case can be completed quickly and efficiently.

At Precise Mortgages, we allow customers to remortgage on both our core buy-to-let and residential mortgages. We are also one of the first lenders to offer Help to Buy remortgages with zero product fees, refund of valuation and cashback to help customers make the transition from first-time buyers to established homeowners.

So whether your customer wants to unlock equity in their property, is nearing the end of their term, wants to escape from their lender’s reversion rate or simply wants to move to a cheaper product, it is up to all of us to ensure that we offer customers options and choice.

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Precise Mortgages is a trading name of Charter Court Financial Services Limited which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Financial Services Register Firm Reference Number 494549). Registered in England and Wales with company number 06749498. Registered office: 2 Charter Court, Broadlands, Wolverhampton WV10 6TD. Copyright © Precise Mortgages 2018.