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Borrowers on unfavourable rates should be first in remortgage queue – Hunt

by: Bob Hunt, chief executive of Paradigm Mortgage Services
  • 29/11/2021
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Borrowers on unfavourable rates should be first in remortgage queue – Hunt
If we thought the lead up to November’s Bank of England base rate decision was somewhat frenetic, I suspect we ain’t seen nothing yet following the publication of the recent consumer price index data.


In case you’ve not seen the latest data, it reported that the annual inflation rate had risen from 3.1 per cent in September to 4.2 per cent last month – that just so happens to be the highest annual rate since November 2011 when it hit 4.8 per cent.

The anticipation must be that in the months ahead, that rate is likely to be surpassed. 

The pressure to act on inflation, and the approach the Bank might take in order to curb it, has been building for some months now and it was interesting to hear the Chancellor during the Budget suggesting he had written to the Bank to remind them of their responsibilities in terms of the two per cent inflation target. 


An independent market

Far be it for me to suggest the politicians are seeking to ‘influence’ an ‘independent’ body, but there seemed to be little doubt that the Chancellor was expecting the Monetary Policy Committee (MPC) to act sooner rather than later.  

The fact the MPC didn’t act in November is perhaps a signal of its true independence. However one wonders what the impact of these latest inflation figures will be, whether it will feel compelled to do so in December, and what the repercussions might be for our market in particular.  

Perhaps understandably, given their rarity, bank base rate rises are often seized upon by both media and stakeholders alike. If ‘rates are going up’ then the obvious message is to ‘act now’ before they go up again and really add to the cost of your mortgage. 

However, the vast majority of borrowers are on fixed rate products anyway so the impact of a rise will not be felt in that sense.

Perhaps, of more interest and a more impactful message, exists around those who are essentially sitting on highly uncompetitive products. 


Targeting borrowers on high rates

Anyone who remortgaged over 18 months ago, or indeed the thousands upon thousands of borrowers who have never remortgaged at all, are clearly going to find a much more competitive mortgage environment to enter right now – even with product rates having inched up from their previous lows of a couple of months ago. 

In this day and age, it still staggers me that we don’t see more remortgage business. Levels of borrower inertia are still bewildering in my view, and any borrower who is currently sat on an standard variable rate (SVR) or an uncompetitive rate seems somehow to be an affront to the advisory profession. 

We know why lenders are happy and willing to have large numbers sat on their back book paying over the odds, but anyone else involved in the market must be scratching their head in bemusement that this is still tolerated. 

So, while a forthcoming bank base rate rise may not ultimately make too much difference, it does present a rare opportunity to shout the remortgage message from the rooftops.  

Let’s not miss this chance and let’s help as many borrowers who are overpaying to at least recognise there is a whole world of other products and solutions available to them. 

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