Undoubtedly, the fact that any rise in Base Rate looks increasingly distant, and when it does come will be in gradual increments, means that many borrowers might feel now is not the time to remortgage.
However, we might also suggest that within many advisers’ client banks, there will be significant numbers who might be perfect remortgaging material.
I think remortgaging is so subdued at present because either many borrowers have actively tried to change deals recently and found themselves unable to because of affordability constraints, or they have decided they are not in a position to secure a switch. Of course there will be others who remain on eye-wateringly good deals from years back who do not want to change but I suspect that, particularly given the very competitive deals currently available, many ‘mortgage prisoners’ would be keen to make a move if they could.
But many borrowers will not be ‘mortgage prisoners’ forever. House price growth throughout 2014 will mean some borrowers will now be able to remortgage. They will perhaps no longer be in negative equity and LTV levels will have moved southwards enabling many to secure new deals. Therefore, advisers might be well advised to revisit those clients who, perhaps just six to 12 months ago, might have been deemed a ‘prisoner’. We would suggest there is a genuine untapped opportunity for advisers here.
Both client needs and markets can change very quickly, so advisers do need to examine all options with clients, especially those who might consider themselves stretched on income. The pre-end of year ‘price war’ is in full flood and there are currently deals available which, quite frankly, may not last forever.
Although lower-rate trackers may be right for some, longer-term fixes may not be this cheap again, and as we move into 2015 – and towards a General Election – the cost of borrowing and mortgage rates could rise irrespective of where Base Rate is.
And don’t forget, this contact should not be a ‘mortgage only’ conversation. Instead advisers should be marketing their proposition fully in areas such as protection, general insurance, conveyancing and so on. This will not only help the clients themselves but also bring in referrals which can sustain a business.
Richard Adams is managing director of Stonebridge Group
