For brokers, if they see a client coming to the end of their term and there is a better rate available then it is within the Treating Customers Fairly guidelines that they remortgage them onto the lower rate
Toni Smith is sales operations director at First Complete
The remortgage market is a growing challenge. An estimated 100,000 people will come off a fixed rate mortgage in the next few months and with so many more attractive products out there, coupled with a real possibility of the interest rate increasing, it is a great time for brokers to be contacting these clients to review their situations.
However, many brokers are nervous about raising their clients’ hopes by talking through the benefits of a new and potentially cheaper mortgage product.
This nervousness has arisen as a result of more stringent affordability criteria post MMR. Whilst many of these clients will have been paying their mortgage for years without ever missing a payment, in a post MMR environment they may find that they do not now qualify for a ‘new’ mortgage due to the affordability guidelines.
The FCA stipulated a requirement for lenders to offer transitional arrangements for those who took out a mortgage previously to avoid such a situation but so far we have seen very little of this actually put in place.
This could be because lenders are not talking up transitional arrangements enough so that brokers are largely unaware of them but with so many impending remortgages there is an urgent need for these to be put in place.
Responsibility will of course still lie with the broker to ensure that a client’s circumstances have either stayed the same or improved before looking to remortgage but to be fearful or nervous about entering into these discussions cannot be treating customers fairly.
What we need is for lenders to look at the payment history of these people remortgaging. If someone has kept their payments up to date up until now there is a very high likelihood that they will continue to do so on a new rate – especially if the new rate is lower or the same as their existing one. On top of that, many may well have undergone a positive change in circumstances, such as a pay rise, since they last took out their mortgage.
Even before the MMR most brokers applied a level of stress testing anyway, especially those who take protection sales seriously.
In many ways there was more clarity on stress testing before the MMR, where now there is a level of confusion and secrecy around it as many brokers are unclear on exactly what each lender’s stress test policy is. While some are clear about it others keep it shrouded in secrecy so a broker is never clear on exactly when a case will go through and when it won’t.
For brokers, if they see a client coming to the end of their term and there is a better rate available then it is within the Treating Customers Fairly guidelines that they remortgage them onto the lower rate.
We need to work together to make sure this is still possible and the broker really can do the best for their clients.
