There is a long tradition in politics, business and the economy to look at trends and from them try to glean some idea of what the future holds. In the lending market it is particularly common to try and see a pattern, a glimpse of what might be happening ahead.
So the latest trend to come under the spotlight is the upsurge in remortgage business. Now, as an ex broker myself, I am delighted that this is the case as it tells me that the industry is fully engaged and there is more confidence from the public in the economy. As a provider of an online conveyancing panel, I am doubly delighted that there is more business for the conveyancers on the SortRefer panel and broker customers are receiving a first class service.
The Bank of England has been forecasting rate rises for eighteen months or more and while we have got used to these siren calls coming to nothing, the inevitability of an imminent rise is going to make more clients on SVRs or coming to the end of discounted or tracker deals, look around for a safe haven. Pretty much everyone has had a good run over the past five years but now the remortgage market will really start to grow as the availability of ‘good’ fixed rate options shrinks as demand grows.
To put it in perspective, SortRefer remortgage transactions increased a whopping 73% when looking at November 2015-January 2016 and compared to the same period in the previous year so we know that the wave is building.
However, I am always wary of the conclusions drawn from statistics because they can only reflect what they report at that particular moment and there are plenty of bumps in the road that tend to be known only when you run over them. With the fragility of the world economy (the recent China crisis being a case in point), a remortgage surge is great but it does not necessarily mean that a new golden age is upon us just yet.
From the conveyancing point of view, we try and urge brokers to make sure their customers think carefully before taking the sweeties being offered with remortgages that include a ‘free legals’ incentive. I doubt that many clients who are signed up for free legals are actually aware that the conveyancer is only representing the lender. While many remortgages are straightforward there is still potential for your client to be exposed. However, taking a cashback deal means your client can engage his or her own choice of solicitor, which is why our fixed price remortgage is so popular.
Ensuring that a client has the right legal representation is as important as choosing the right mortgage product and brokers are in the right place to make sure that happens. With the surge in remortgaging gathering pace, it would be easy to neglect the conveyancing as just the support act to the remortgage headliner and in these days of ensuring the right consumer outcomes that would be a mistake.
Kevin Tunnicliffe is managing director at SortRefer