Now the election, which has long been looming over the UK economy, is out of the way, any excuses for market uncertainty influencing business volumes need to be cast aside and more activity should be generated across the board.
So let’s concentrate on the available opportunities within the mortgage market as some relative calm is bestowed upon us. And the remortgage market is certainly one which continues to offer up plenty of opportunities, as well as signs of casting aside some previous malaise.
In recent weeks the buy-to-let remortgage market is one which has led the way, at least activity-wise. According to the Mortgages for Business Complex BTL Index, in Q1 2015 remortgaging accounted for approximately two thirds of standard buy-to-let mortgage transactions. It showed that in the first quarter of the year 66% of mortgages against standard buy-to-let property were remortgaging loans, leaving 34% for the purpose of buying a new property.
Positive trends
Focusing on residential lending, the latest figures from the Council of Mortgage Lenders for March showed that remortgage lending increased month-on-month with 26,600 loans advanced – up 19% on February and 6% on March 2014. The value of these loans (£4.2 bn) was also said to have increased month-on-month by 24% and was up 14% year-on-year compared to March 2014.
In the first quarter of 2015, remortgage lending increased quarterly with 75,400 loans advanced – up 3% on the fourth quarter but down 5% on the same quarter last year. The value of these loans (£11.8 bn) also increased quarterly by 6% and was up 2% year-on-year compared to quarter one 2014.
Is this an early indication of a reinvigorated remortgage? Let’s hope so.
Additional research, this time from Nottingham Building Society, adds further fuel to the fire after findings highlighted that up to one in six homeowners are considering remortgaging over the next six months. Not only that, but five-year fixed rates were suggested to be the most popular choice for those switching deals.
The research showed that 27% of potential remortgage customers would choose a five-year fix ahead of the 21% who said they would opt for a two-year fix. Just 7% of those surveyed were opting for tracker rates while 4% would consider discount deals. A further 7% said they would choose a standard variable rate.
This makes for interesting reading and reflects the competitive pricing of longer-term remortgage deals.
Strength in numbers
In fact, upon reading a recent article on Moneyfacts it was suggested that; “the average five-year fixed rate mortgage fell by a whopping 0.09 per cent in May, down from 3.53 per cent in April to a new record of 3.44 per cent.” According to Moneyfacts, longer-term fixed rate deals have become so competitive that the average five-year fixed rate is now considerably lower than the average two-year rate in May last year (the average two-year rate stood at 3.62 per cent in May 2014).
Given the strength of competition within the lending community, it’s no wonder that the remortgaging sector is experiencing somewhat of a resurgence. Although in truth there is still some way to go before it truly reaches the heights that its potential demands. And this potential is underlined by there being in excess of £10 million worth of fixed-rate deals maturing in both May and June. Making it the perfect time to revisit your client bank and climb aboard the reinvigorated remortgage bandwagon.
Jackie Uhi is managing director, mortgage distribution at Barclays
