John Cowan: Refinancing will account for two thirds of the market this year

Ryan Bembridge

March 18, 2019

Remortgages and product transfers will make up two thirds of mortgage business this year, Sesame Bankhall Group chairman John Cowan has predicted.

Cowan (pictured) went on to say that Brexit uncertainty – a contributing factor to refinancing being more commonplace than purchase – could drag on for at least a couple of years after the end of this month.

Cowan said: “A third will be new transactions and two thirds will be refinancing, which is a mix of product transfers and remortgages.

“The man on the Clapham omnibus is the key to it.

“All the indicators – low interest rates, affordability – are in place. If we can fix the confidence of the man on the Clapham omnibus, he will buy houses.”

David Hollingworth, director of communications at L&C Mortgages, backed Cowan’s prediction.

He said: “The [two thirds] figure is already heading in that direction, so that seems a fairly reasonable assertion.

“You’re seeing the shift towards a bigger proportion of remortgage which is helped by people considering whether they should be locking in to low rates now. Uncertainty adds weight to that thinking.

“We’ve had a couple of rate rises and a general climate where people are thinking about what they should be doing with their biggest outgoing. There’s a feeling of battening down the hatches and not moving.

“It’s busy on the remortgage front at the expense of purchases and you don’t want that to continue for a long period of time.”

The UK is currently in a state of Brexit limbo. Prime Minister Theresa May is struggling to get a Brexit deal approved in Parliament and there is the question of whether the Article 50 deadline will be extended. Even if a deal gets put through by the end of the month Cowan thinks the industry needs to be braced for years of uncertainty.

Cowan added: “I don’t believe Brexit is a one-time fix – some people think once we get over Brexit everything will be okay.

“I think what happens after Brexit is a few years of trade discussions and trade negotiations, and you’ve got a factory closure here and there, so you’ve got uncertainty hanging around for a while.

“A couple of years of uncertainty after Brexit will dampen the market, unless of course they reverse the decision and we don’t leave.”

Aaron Strutt, product and communications director from Trinity Financial, is more pessimistic regarding how long political uncertainty will last.

Strutt said: “The fallout from Brexit could last a lot longer.

“Getting trade agreements, confidence returning, companies leaving, we don’t know what’s happening with free movement…

“It could drag on for seven years.”

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