"This presents a significant opportunity for advisers to proactively explore the remortgaging options available to their clients and clearly illustrates the significance of remortgage opportunities as the bedrock of the mortgage market."
As we head into the second half of 2024, there are some positive signs things are starting to look a little brighter for the UK mortgage market and wider economy.
Inflation is sitting at the Bank of England’s target rate of 2%, the lowest it has been in nearly three years; interest rates are starting to fall and it is hoped that the strong majority in the recent General Election will bring some much-needed stability to the country’s political landscape.
In the housing sector, appetite among borrowers is also returning, with figures from Rightmove showing demand amongst buyers up 5% in June 2024, and average asking prices remaining near record high levels. All of which points to an optimistic outlook for the mortgage market as the year progresses.
While the increase in purchase business is welcome news after what many people consider to be a challenging few years, it is, in fact, the remortgage market that presents the greatest opportunity for advisers as we head into the latter half of 2024.
According to recent data from CACI via Barclays’ Market Maturity and Remortgage Opportunities: July to December 2024, £98.4 billion worth of residential mortgages and £16.4 billion worth of buy-to-let deals are due to come to an end between July and December 2024 this year.
In particular, October looks set to be a big month for the remortgage market, with £25 billion worth of residential mortgages expected to mature in this month alone, and a further £3.4 billion worth of buy-to-let mortgages also coming to an end at this time.
With such a considerable amount of remortgage business up for grabs, this presents a significant opportunity for advisers to proactively explore the remortgaging options available to their clients and clearly illustrates the significance of remortgage opportunities as the bedrock of the mortgage market.
This is particularly significant given the widespread speculation that the Bank of England will cut Bank Base Rate (BBR) from 5.25% in August and possibly again later in the year. Not only will this help to drive down rates and increase competition, it will also open up borrowing options to clients and further stimulate market growth.
With some low LTV rates starting to fall below 4% already for residential and pricing also beginning to dip for buy-to-let products, then the opportunities in the remortgage market become even more compelling as there will likely be a large number of borrowers who will be better able to meet the affordability requirements of mortgage lenders.
This will enable them to remortgage onto a better deal with a new lender rather than being stuck with a higher and less competitive product transfer rate from their existing provider.
For advisers working in the mortgage market, this presents an ideal opportunity to proactively engage with clients by seeking out those with mortgages due to mature over the next six months.
Taking the initiative and engaging with these borrowers in plenty of time will enable advisers to get front and centre with their clients and reduces the chance of them going directly to their current lender.
Not only will this enable the borrower to ensure they are getting the best product for their needs, it will also ensure the adviser retains the business and doesn’t lose out on valuable remortgage income.
Speaking to the client ahead of time also opens up the potential for any ancillary sales opportunities by enabling the adviser to determine any life-stage changes the client may be experiencing and whether any further protection or general insurance, or indeed any other, products are needed.
One year on from the introduction of Consumer Duty, this is more important than ever as there is greater regulatory onus on advisers to ensure they are delivering positive outcomes to all their clients across a multitude of financial wants and needs.
Having the conversation early will enable advisers to arrange the cover themselves or, for example, within our network they can refer to a specialist, who can provide the necessary regulated advice and solution.
Not only will this ensure their client’s mortgage and protection needs are adequately addressed, it will also ensure advisers are meeting their Consumer Duty obligations while continuing to earn an income.
Even while we work through the summer, advisers who are contacting clients now about their Autumn remortgage, should be able to secure that business well in advance, and ensure the borrower has the pick of the market, particularly relevant in a fast-changing environment.
