Brokers must take advantage of bumper year for remortgaging
There’s little question that the mortgage industry continues to be preoccupied with the purchase market. It’s understandable too – we have just a couple of months until the Stamp Duty holiday deadline at the end of March, and talk of a possible extension hasn’t yet led to any actual changes.
With so many deals struggling to get over the line, it’s somewhat inevitable that brokers are focusing so much of their efforts and attention on the purchase market.
But the truth is that this year also presents a huge opportunity for brokers when it comes to remortgages.
Advisers know only too well that significant numbers of their clients are on fixed or variable deals hitting maturity this year. This is particularly true of buy-to-let borrowers, as we are approaching the five-year anniversary of the introduction of the 3% Stamp Duty surcharge for second home purchases.
Large numbers of investors saw that new tax burden as the inspiration for adding to their portfolios, with five-year fixes particularly popular. Those borrowers are now heading towards moving to their lender’s SVR and the likely bill shock that brings.
It’s certainly not just buy-to-let either, with plenty of residential borrowers also seeing fixed rate deals mature. There are bumper months ahead – data from CACI last year suggested that April, June and October this year will each see fixed rate deals worth in excess of £26 billion mature.
Helping borrowers take that next step on their borrowing journey is such a crucial part of the service brokers provide. We know that the best brokers are those who treat their clients as customers for life, keeping in contact as deals near maturity in order to help them avoid that bill shock by moving to a new mortgage.
For some, product transfers may be an appealing choice. This area of the market has grown incredibly in recent years – the most recent data from UK Finance showed that in 2019 more than 660,000 borrowers switched products with their existing lender on an advised basis, with deals worth £97 billion.
It’s welcome that brokers are finally being paid a fee for these cases, given they still involve substantial work from advisers. They are often a swift case to conclude, too, given the lack of legalities involved.
But intermediaries know only too well that in many cases clients will be better off moving to a new product from a rival lender. And while there is a greater legal process involved, a remortgage case doesn’t have to be a lengthy experience for broker and borrower alike.
Last year we launched Rapid Remortgage, a service aimed at dramatically reducing the time taken to complete remortgages, and the feedback we’ve had from advisers and their clients has been hugely encouraging. Rapid Remortgage is available on cases that use the DigitalMove proposition and cases are quickly assessed to ensure borrowers qualify, with a starter pack then dispatched. Once that pack is returned, borrowers can be provided with confirmation from our partner solicitors that they are completion-ready by the end of the following working day.
Ultimately it comes down to working with the right people. Partnering with the right legal team means that a remortgage does not need to take much longer than a product transfer, and potentially leave your client in a better position to boot.
This is an industry built on relationships and collaboration. Just as borrowers look for the right broker to help them find the right product, whether purchasing a property or moving to a new mortgage, so too do advisers need to think carefully about the lenders, legal firms and technology partners who can help them deliver a swift and comprehensive service.