EXCLUSIVE: Borrowers choosing SVR
The survey carried out on 614 brokers revealed that 53% said their customers had made a choice to remain on lender’s SVR.
While there is an appetite for remortgaging many borrowers on SVRs are being held back by decreasing equity.
The proportion of brokers who had customers that did not think they were able to get a new mortgage in the current environment was 12%.
Some 10% of brokers said customers did not understand the implications of future rate rises on their payments, while 17% said they felt fixed-rates were still too expensive to be attractive; the remaining brokers, 9% cited “other” reasons.
Alex Hammond, spokesman for Kensington, said: “The research tells us that over half of customers who are currently sitting on their lender’s variable rate and unlikely to remortgage before Base Rate starts rising, do so out of choice.
“This could certainly be seen as a barrier to intermediaries growing their remortgage business. But it could also present an opportunity for brokers to revisit their client base and educate those clients about the choice they make, the options they have now and the impact that rising rates could have on those options in the future.”
He added that even if this does not resonate with customers now it will start a dialogue and could put intermediaries at front of mind when those clients do decide to remortgage.
He said: “What’s more, the research also says that over a fifth, 22% of customers are not remortgaging because they either do not understand the implications of future rate rises on their payments or because they do not think they are able to get a mortgage in the current environment.
“These clients present a golden opportunity for intermediaries to prove their value. Borrowers needn’t be trapped by perception.
“Mortgage intermediaries have access to a wealth of products, providing good value for real people with a range of different circumstances, which may not be available direct to customers on the high street. Make use of those products and you could add incremental growth to your business.”
Andrew Montlake, director at Coreco, said: “A lot of clients are still of the “wait and see” variety where remortgaging is concerned.
“What we’re finding now is that the new range of low rates that are coming out are starting to come through as business.
“When you can get trackers at 1.99% and 5-year fixes at 3.84% it does make people begin to think on whether now is a good time for remortgaging. Now rates are reduced, you may start seeing more remortgaging with people that have decent equity.
“There is still however a raft of people who can’t due to changes in criteria, job changes and other changes in their circumstances.”