SPECIAL FEATURE: The remortgage market in 2016
John Phillips, national operations director of Just Mortgages, suggests that remortgaging in 2016 will need to be broker driven.
The success of the remortgage market in 2016 will be very much down to brokers.
Despite Bank of England governor Mark Carney’s predictions back in August regarding an interest rate rise at the turn of the year this is now looking incredibly unlikely.
In fact, the wider economic climate is such that I will be very surprised if there is an interest rate rise at all this year.
While there remains little prospect of a rise, few borrowers will be driven to proactively look to remortgage, so I expect the remortgage market to remain pretty flat throughout 2016.
In fact, there are many borrowers who still do not realise that it is actually possible for them to change rates, so it will very much be down to brokers to drive this market.
There are many people who are happily sitting on SVR not realising that they can actually switch and that if they do they may save up to 3% or 4% or more as the gap between some new business rates and some SVRs is now as much as 5%.
Often the only people who proactively look to change rates are people who are struggling financially so face a real hit when their initial rate steps up to SVR.
It will therefore be up to brokers to drive the remortgage market.
There are borrowers who will be very much in need of advice, but at a time when there is so much new business coming in, many brokers find it hard to find the time to also service their back book.
Most brokers I know rely on their CRM systems and finding the time in between new customers, so when this fills up all of someone’s time then past customers don’t get a look in.
It was in order to tackle just such a problem that in the middle of last year we recognised this need and actually set up a special division at Just Mortgages especially to focus on contacting existing customers coming to the end of their initial term.
We established a dedicated telephone team that proactively contacts every borrower three months before the end of their promotional period to offer them a financial review, either with their existing broker, a new broker or with a qualified adviser over the phone.
The response to this has been incredibly positive as most borrowers are very open to remortgaging once they realise that it is both possible and will save them money.
Of course any more speculation about rate rises, or indeed a freak rise, will see a surge of applications once again as we saw back in August.
This fed through to October’s completion rates where, according to Council of Mortgage Lenders data, we saw a 34% rise year-on-year compared to just a 13% rise for home movers.
However, if the state of the global economy stays as it is, a UK rise looks more distant than ever, despite the Fed making the move to raise US rates by 0.25% in December.
That means the driver for the remortgage market will remain firmly in the lap of mortgage brokers.