Did you know that it’s 50 years since the film The Great Escape was released? Its cult status has long been cemented since then by iconic images of Steve McQueen, that motorbike and of course the renowned theme tune.
I defy you now not to be either humming it, singing it or at least have it playing in your head. So what I hear you cry? Well for this month’s article I’ve been asked to write about the remortgage market and the prominence of Barclay’s award-winning Great Escape remortgage range in this marketplace.
So first up let’s put some stats out there:
• From its launch in October 2011 to the end of March this year, 46,500 borrowers have escaped their lender by taking one of our Great Escape products
• Customers taking a Great Escape product will save on average £1,639 over the first two years
• In total, the full range of Great Escape products could save customers £76.2m over a two-year period
In addition our research suggests that there are 3.1m customers currently on an SVR rate who could remortgage and stand to save substantial sums – conservatively put at around £289.6bn by doing so. These are huge numbers and obviously continue to represent a wealth of opportunities.
Since the launch of the Great Escape we’ve worked closely with many intermediary firms to help them grab the remortgage market by the scruff of the neck with marketing campaigns, innovative sales techniques and downright hard work to service the needs of the growing numbers of mortgage holders getting splinters from SVR fence-sitting.
In terms of lending support, innovation, security and a degree of flexibility remain key elements to the future of this sector and this is why features such as switch and fix and drop-lock options have been introduced and continue to prove extremely popular.
But with so many great products, innovative features and increased competition on offer why hasn’t the remortgage market reached the heights that it could and possibly should have?
Figures from the CML stated that 2012 held the lowest number of borrowers choosing to refinance since 1997, representing 316,000 loans and a 15 year low. However, recent CML data showed that remortgage lending hit a five month high in April helping to boost gross lending by 5%. These correspond with Bank of England data also published recently, which found remortgage lending bucked the trend of a Q1 dip in gross mortgage lending.
This improvement does help to highlight the potential and opportunities available in the current remortgage market but we, as an industry, must do more. There is no doubt that Help to Buy will assist in providing a further boost to these figures but how immediate these effects will be remains to be seen.
In truth the remortgage market does somewhat flatter to deceive and the obvious reason for this is a lack of higher LTV remortgage products. As ever the higher the LTV the larger the balancing act for lenders and many remain in a position where the capital risk to reward ratios are not achievable. Not to mention the need to stay within the responsible lending boundaries.
It’s clear that homeowners need more help, however, so do lenders. Help from government and especially from intermediaries. Arguably the biggest impact, in terms of uplifts in remortgage business volumes, will come from intermediary firms themselves. Too many homeowners are still adopting the ‘wait and see’ attitude which continues to hold back lending.
Borrowers with this attitude are gambling with their financial prospects in the hope of shaving a few basis points off a future deal whilst missing out on immediate savings. Of course it’s up to us as lenders to make sure we develop attractive products at a variety of LTV ranges but the fact remains that lenders need more proactive intermediary support than ever to ensure that homeowners everywhere are aware of the benefits in acting now rather than later.
So let’s push on together to help millions of homeowners embark upon a Great Escape of their own. All together now da da, da da da da da……
