Firstly, it would be interesting to know which part of the remortgage market is working. I see two distinct segments in the remortgage market. There are those who are coming to the end of their current product, predominantly fixed rates, looking for a new rate, whether that is a remortgage or product transfer. Then there are those that are currently on either a lender’s Standard Variable Rate (SVR) or ‘revert to’ rate. Those coming to the end of a product deal are probably the reason for the peaks and troughs reported, as it depends upon the level of cessations that month.
The real key to any underlying sustained growth in the remortgage market will be when we see a consistent movement of customers switching out of SVR. This is what we are all waiting for, but when it will come is anyone’s guess.
However, when this move does arrive, who will benefit most, lenders or brokers?
For SVRs to rise, prompting customers to seek a lower rate elsewhere, there must have been a change in market perception, which normally means higher swap costs. But another driving force behind a mass migration away from SVRs may also be the work a number of lenders are doing behind the scenes to improve their technological solution for managing existing customers. Many already have a retention strategy, which is very welcome, and there are many more looking at this option.
Some lenders are also building the technological capability to deal direct with the client. Surely this would only work under a non-advised process, so it will be interesting to see how this is viewed by the Prudential Regulation Authority and the Financial Conduct Authority.
Before we are all up in arms at this strategy, surely with a business hat on it makes sense to have a multi-channel proposition, just as advisers have multi product proposition. Putting all your eggs in one basket can be a risky strategy. Whilst we may understand, it does not mean we need to sit back and just watch it happen.
The intermediary market needs to stick even closer to its clients even if they are happy on SVR, because lenders will still talk to them at different points in the cycle. We also need to do it better.
Research from lenders has shown that on remortgages or product transfers the client having the same adviser as on the purchase is a lot lower than we would like to admit.
Technology will be key, but do we in the intermediary space have the right kit? Probably not just yet, but what we do have has to be better used along with our skill at relationships if we are to keep the client long term.
