UK Finance: Refinance boom to end in 2020

Ryan Bembridge

April 12, 2019

The rate of remortgages and product transfers are likely to slow come 2020, Richard Rowntree, chair of the mortgage product and service board at UK Finance has warned.

However this year the trade body expects both remortgage and product transfers to be as strong as last year.

Rowntree (pictured), who is also managing director of UK mortgages at Bank of Ireland, was speaking at the UK Finance Annual Mortgage Lunch at the Royal Lancaster Hotel in London.

He said: “We do expect remortgaging and product transfers to continue to be strong in 2019 as they were in 2018, especially as previous 2- and 3-year fixed rate products come to an end.

“But with a move to over half of all new mortgages going on to 5-year fixed rates, the rate of churn will not continue at the same level into 2020.”

He added: “As for the buy-to-let market, here we expect to see the impact of tax, legislative and other changes continue to be felt, particularly as landlords have had to pay their first increased tax bills.”

Rowntree pledged to continue lobbying for fair leasehold practices.

He said: “As mortgage lenders, we can lobby to ensure that no more properties with unfair lease terms come onto the market and as a body we’re aiming to do more to make clear the overall industry position on new build leasehold terms.

“We’re not in a position to directly solve this issue, but with two thirds of purchases made with the backing of a mortgage, we’re in a strong position to influence change.”

Regarding later life lending, Rowntree conceded that Retirement Interest-Only mortgages have got off to a slow start after it emerged in the Daily Mail that just 112 RIOs were completed last year.

However he added that they definitely have their place in assisting interest-only maturities. It may be that product use increases now a major high street lender has entered the market in Leeds Building Society, though he noted the argument that affordability constraints affecting joint borrowers will limit takeup – as the loan needs to be underwritten on the lowest income of either surviving partner.

He added: “Time will tell [whether RIO will take off] of course, but the challenges for customers in an ever more complex market are great, and that means that advice is particularly important for those in later-life to ensure the best possible result for the borrower.

“This is why at UK Finance, we support the call for more holistic advice so that customers take into account all their options – downsizing, thinking about tax and benefits, inheritance, use of pensions etc.”

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