Just 7% of 107 brokers responding to a Mortgage Solutions poll said they have experienced a significant rise in queries about remortgaging since the Bank of England cut interest rates to 0.25% last week, while 28% said enquiries have risen only ‘slightly’.
Duncombe said that brokers with L&G’s mortgage club have witnessed a large proportion of clients contacting with questions in relation to remortgaging, but pointed out that brokers should not sit on their hands and wait for customers to get in touch first.
“The last couple of months have seen a period of uncertainty in the mortgage market and where there is ambiguity there lies a need for educated advice. Be proactive. Now remains a great time for borrowers to consider their options, particularly if they are coming to the end of their mortgage term.
“But advisers can’t assume the customer will just pick up the phone to them. If you are not speaking to your customer, someone else will be. Many customers may become complacent in thinking that rates are coming down, presuming they don’t need to act. Brokers should be actively contacting their clients and using this interest rate cut decision as a reason to look after their back book and make sure consumers are well informed,” he added.
Lenders moved to pass on the base rate cut to a number of customers last week, specifically to those on a standard variable rate and tracker mortgage borrowers.
However, Sebastian Riemann, financial consultant at Libra Financial Planning, pointed out that new customers would not necessarily benefit from interest rate cuts if lenders’ choose to increase product pricing.
“While lenders are passing on the rate cut to current mortgage customers, they’re not doing this so much with new products, so the quicker a customer can get on a tracker, the better,” he explained.
“I’ve discussed remortgaging with customers but there’s not been a surge in enquiries, and for clients that I am dealing with, people are generally sitting on the fence waiting to see what the lenders do next. What I’ve understood from talking to a lot of clients is that they’re expecting that lenders are going to drop their rates even more, which is probably quite unlikely.”