Remortgaging opportunity knocks – Charles Haresnape

As the dust starts to settle, the overall picture seems to be far calmer than many had predicted.

The most recent market survey from RICS showed that after a bit of a wobble, confidence is starting to return to the market, with 5% more estate agents reporting prices rising rather than falling in July.

Following the referendum result, the biggest single event to influence the future of the housing market was the decision from the Bank of England to cut base rate to 0.25%, a record low and the first rate change since 2009.

Many have predicted that this is likely to lead to a rise in already strong remortgaging activity. Remortgage lending in the month leading up to the referendum totalled £5.6bn, up 8% on May and 6% compared to a year earlier according to the Council of Mortgage Lenders.

However, data from LMS shows that the percentage of remortgagors consulting a broker or adviser rose by 3% from 38% in May to 41% in June – the highest amount since December 2015, a sign that customers are still looking for a helping hand through these uncertain times, it is likely that the market will see rising numbers of people looking to remortgage in light of the interest rate cut.

Buy-to-let landlords have a lot to gain from considering remortgaging part or all of their portfolio. Figures from Moneyfacts has suggested that this could mean a saving of as much as £2,000 over the course of five years. While remortgage levels have been strong in recent years, the additional rate cut will probably be the impetus that prompts a new wave of landlords and commercial property owners to look again at remortgaging.

If rates continue to fall, there is also the possibility that those on fixed rates may be better off moving onto a cheaper deal once they take into account early repayment charges.

Widespread uncertainty may have given many borrowers a ‘deer in the headlights’ moment, and lenders and intermediaries should talk to their clients to ensure they take advantage of any benefits that remortgaging in the current environment can offer.