The remortgage market really has started 2022 with a bang…
This product type has always provided a solid business foundation for all intermediary firms but it has taken something of a backseat to a purchase arena which exploded into life over large parts of 2020 and 2021.
However, the talk in the early part of 2022 has all been about the remortgage market and this has been further amplified by the Bank of England raising interest rates for the second time in three months to 0.50%. Whilst not entirely surprising, this has certainly raised some eyebrows from a borrowing perspective as many homeowners had become accustomed to a 0% interest rate environment. The reality is that whilst the vast majority of these will feel no immediate impact due to being on fixed rate deals – when combined with soaring energy and general household costs – awareness has been raised around maintaining a better control over monthly outgoings, especially those at the larger end of the scale.
This rise in awareness represents great news for the intermediary market, and for those homeowners and landlords who are in a position to take advantage of some highly competitive rates on offer. Although the question is – how long will rates remain low?
The race for market share should ensure that rates stay relatively low for a while but with lingering uncertainty around base rate movement and rises in living costs, it’s prudent for advisers to ensure that homeowners are acting sooner rather than later to ensure they lock into the best possible deals.
In terms of market conditions looking forward, at the turn of the year, IMLA delivered a prediction that the remortgaging will be stronger in 2022, reaching £89 billion, compared to £82 billion in 2021. The buy-to-let market is also likely to see heightened activity levels as a result of large volumes of five-year product terms maturing which were taken out prior to the Prudential Regulatory Authority (PRA) introducing its enhanced mortgage stress tests back in 2017.
The latest LMS Remortgage Healthcheck Index for Q3 2021 also outlined that its Homeowner Equity indicator rose by 8.9 points in Q3 to stand at 86.7. This was not only a record high, but the steepest increase in the indicator since Q3 2020 when the UK housing market bounced back from a near standstill. This rise represents further positive news for homeowners as it puts them into a more favourable remortgaging position. A factor which also makes life that little bit easier for intermediaries.
Within the Healthcheck, it was interesting to see the comment that a rise in tech capabilities over the pandemic is also likely to set the scene for a more efficient remortgage market in 2022 due to the ability to process more cases quicker. As a lender who is nearing the end of an extensive tech overhaul, I can certainly agree with this point and let’s hope that efficiency and the remortgage market go hand in hand moving forward.