Following the Bank of England base rate cut in early August, we have seen brokers experience a rise in remortgage enquiries and the latest Council of Mortgage Lender’s (CML) monthly lending trends confirms this position. The CML data showed that remortgages have hit a seven-year high as borrowers look to take advantage of record low interest rates and switch to a better mortgage deal, often saving themselves thousands of pounds in the process.
Despite the remortgage rush, around half of the lenders in the housing market have not yet passed on lower rates to customers on their Standard Variable Rate (SVR) products. This is a key driver of remortgage activity. For those borrowers who are on an SVR or are coming to the end of their mortgage term, now is a great time to seek advice from their broker in order to ensure they are on the best possible mortgage deal for them. For some time now, SVR rates have stayed stubbornly high relative to base rate, so borrowers who are on these rates have the potential to save themselves sizable sums of money by sitting down with a broker to review their options and looking at remortgage option.
It is encouraging to see that borrowers have the scope to benefit from the low interest rate environment – but more still needs to be done to make sure consumer are aware of the opportunity. Yes, we’ve seen a rise in remortgaging, but there are still plenty more people out there who could benefit from speaking to a broker. Intermediaries should be grasping this opportunity to get in contact with their clients to discuss their mortgage requirements and make sure they’re aware that a better deal could save them significant sums. If a broker doesn’t proactively speak to their clients about remortgaging, the door is left open for others to swoop in and own the client relationship.
As ever in our market, we need to help customers to overcome their inertia – that feeling that it’s not worth the trouble or that the benefits won’t outweigh the effort of remortgaging. After all – by definition – remortgagors aren’t excitable first-time buyers, but experienced homeowners, who’ve been through the purchase process at least once and may be put off by the perceived inherent complexity of the mortgage application process. This is why we have recently launched a remortgage campaign at Legal & General Mortgage Club to provide literature, marketing material and sample wording to help brokers contact their customers to discuss remortgages.
Although the task of renewing and updating a mortgage contract can seem quite daunting, once a borrower has spoken to an adviser they can be assured they will be receiving independent and unbiased advice and support through every step of the remortgage journey. Statistics prove that the process of remortgaging is well worth it in the long run. Recent research by Legal & General has revealed that the ‘average’ borrower could potentially save up to £1,500 a year by remortgaging. Any intermediary that’s able to deliver those kind of benefits to customers will be highly valued and in the perfect position to pick up further business from the customer.
