According to research from Paragon, which surveyed 350 mortgage brokers, over three quarters thought remortgaging would be the “strongest driver” of business over the next year. This was followed by buy-to-let remortgaging.
Around a third of brokers said that interest-only mortgages would be a significant source of business as borrowers adapt to a higher interest rate environment.
Later life lending and adverse credit was singled out by 29 and 28 per cent of brokers respectively.
Sales market to take a back seat
Brokers thought the sales market would not be as significant a contributor to business for this year.
Less than a quarter, 24 per cent, thought home movers would be a significant source of business, and this fell to 23 per cent for first-time buyers and 18 per cent for buy-to-let purchases.
On the product side, brokers were divided as to whether borrowers would opt for fixed rate deals or variable options.
Trackers and variable products make a comeback
Around 49 per cent said that they thought five-year fixed would be the most popular, and 44 per cent posited that two-year fixed rate would be more popular.
However, approximately 47 per cent stated that base rate trackers or variable product with no early redemption charges would drive business.
Richard Rowntree (pictured), Paragon Bank’s managing director of mortgages, said that after the strong sales market since the stamp duty holiday was brought in 2020, the survey showed brokers believed the “dial will shift and remortgaging will dominate business”.
He continued: “In the owner-occupied market, many borrowers are due to come off two or five-year fixed-rates, whilst the buy-to-let market saw a significant amount of five-year business written in 2018 due to mature.”
“We have helped our own customers to product switch by extending the period at which they can switch to six months before maturity, and we stand well-placed to support professional landlords more broadly who are coming to the end of their fixed-rate deals, particularly those that operate as limited companies, who have four or more properties in a portfolio or operate in houses in multiple occupation (HMO).”
Rowntree added that whilst buy-to-let purchases would be “slower” this year than the prior two years professional landlords would still be looking for acquisitions.
“A slower market means they are well-placed to pick up stock and we know many are keen to add to their portfolios,” he noted.
