According to the Council of Mortgage Lenders (CML), lending hit £21.4bn in July – a figure pretty much the same as June, while figures from the Bank of England for mortgage approvals in July were 60,912 down from the 64,152 in June. An indicator perhaps of higher house prices necessitating the need for larger individual loans?
What we can, however, begin to see is the distinct slowdown in purchase activity, specifically those funded by mortgages. Purchase activity for a long time has been the foundations on which a strengthening mortgage market has been built – helped considerably of course by the buy-to-let sector. Now, though, recent developments and an attempt to disincentive landlords via impending tax changes and Stamp Duty increases, mean that purchase lending was down to £10.4bn in July, from £11.1bn in June. My own belief is that it will continue to fall in August, possibly stabilising from September onwards.
It may well be that the remortgage market, to some extent, rides to the rescue here buoyed by the cut to Bank Base Rate in August, and helped by the Bank of England’s stimulus measures which are designed to keep lenders’ lending during these uncertain times. Whether remortgaging can fill the entire gap left by purchase falls, however, remains a trickier question to answer.
Remortgaging has itself hardly set the word alight over the past few years, not helped by the necessary stricter affordability measures introduced by the Mortgage Market Review. That said, advisers who have clients sitting on Standard Variable Rates, and who also have the ability to meet lenders’ affordability criteria, should undoubtedly be targeting these borrowers. In this environment, where rates continue to tumble – although how much further is debateable – borrower inertia is quite frankly, crazy behaviour and needs active discouragement.
The marketing for this type of remortgage advice services tends to write itself – ‘I will save you £x per month’ should do it – but it’s obviously important to get the medium right. We offer advisers access to emails/newsletter content which can be tailored to the firm, and delivered to existing clients quickly.
They should be in no doubt that you can provide the service and deliver the saving, and that for a relatively small amount of effort on their part, big savings can be secured. Get that message right and hopefully the last few changeable months will translate instead into an Indian remortgage summer that lasts through to the end of the year and beyond.
