Kicking off the year
Bob Hunt is chief executive of Paradigm Mortgage Services
No sooner had the working year kicked off than we got our first set of industry data to chew over – this time in the form of the Bank of England’s Money and Credit statistics.
The data covers November last year but, specifically in the form of rates on ‘newly-drawn mortgages‘, net borrowing and mortgage approval numbers, it gives us insight into where the market is likely to move in the early months of this year.
In the month before the MPC acted to raise Bank Base Rate to 0.25%, rates on newly-drawn mortgages fell by nine basis points while outstanding rates dropped by one point.
It shows a direction of travel for rates southwards, and it will be interesting to see whether the MPC decision does move the compass point in the months ahead. My own view is that it’s unlikely to shift it dramatically, if at all.
Even with the anticipation of BBR continuing to be inched upwards, I think we have an ultra-competitive marketplace which requires lenders to be constantly mindful of where they are on price.
Also, given we are at the start of the year, the need to hit the ground running, to ensure pipelines are full, and to secure business early doors, means that it feels unlikely we’ll see many lenders looking to increase rates significantly.
That clearly bodes well for advisers, and their clients, particularly those wanting to remortgage in 2022. The noise around the market for 2022 is that remortgage business could/should be plentiful and will drive many intermediary’s mortgage activity – low rates will undoubtedly help advisers push the message to existing borrowers that now is a good time to be renewing their loans, either through a remo or PT.
Net borrowing in November hit £3.7bn, up significantly on October’s £1.1bn, and while mortgage approval numbers for house purchase were around the same 67,000 number as the month previous, remortgage approvals were up – moving from 41,978 to 44,529, again cementing the point that we could be seeing far greater parity in the months ahead than we did in a predominantly purchase-focused 2021.
It will therefore not need me to say that advisory firms will need to focus particularly carefully on existing clients coming to the end of their special deals, and existing borrowers who might want to borrow more and are therefore looking for advice to remortgage away from where they currently sit.
PTs are always likely to take a large share of business, but in a world where homeowners might be looking to take advantage of increased property values, and where a changing work/life balance may require changes to existing homes, advisers should have an opportunity to secure some excellent deals for those who want further advances/larger loans in order to make home improvements.
I’ve noticed in recent weeks some commentary around the BBR increase which suggests borrowers have ‘missed the boat‘ when it comes to securing low mortgage rates.
As we all know, rates are always based on a moment in time. Yes, some of the low rates of September and October are gone, but there are still excellent deals to be had right across the board.
Given the money they have to lend, the need for them to lend it, and the competition in the sector, lenders are not going to rest on their laurels or price themselves out of the market, especially when it comes to borrowers with a strong track record and a need to remortgage.
Advisers have an excellent opportunity here to lead the remortgage charge and I have no doubt you will take it.