From some of the coverage being lavished on it recently, it appears that the remortgage market has once again re-found its voice, argues Phil Whitehouse, head of The Mortgage Alliance (TMA).
According to data from Connells Survey and Valuation, remortgage activity has risen by 92% since last November. It adds that remortgages rose by 6% in November compared to October, its fourth successive monthly rise which represents a year-on-year increase of 92% – albeit from a low base. Countrywide has also revealed that remortgage activity increased in October to reach its highest level since March 2009. A quarter of all applications the estate agents received were said to be for remortgages, with consumer confidence playing a key role in the developing trend. It said a growing number of customers were choosing to move from the uncertainty of their SVR to a new raft of competitive remortgages with interest rates lower than the SVR on offer from some high street lenders. In addition according to its recent market forecast Spicerhaart says that it expects interest rates to rise to 1.25% by the end of next year which will have an even more positive impact on remortgage volumes.
So, on the surface at least, it appears that all is well in a market that intermediaries have been praying for a recovery in. But are things as rosy as they seem?
Now I like to think of myself as a glass half full type of person but when you add too much optimism to a glass – let’s say like in the form of ice – inevitably it tends to exaggerate the actual amount you had to start with. Now we all know that the remortgage market is an important one and that any positive signs should be welcomed but, as with much of the market, these have to be taken with some degree of muted enthusiasm.
Whilst nobody is predicting anything like a return to the ‘good old days’ we must remain aware that any increase in this area will be a relatively slow one as challenges involving lending restrictions, tighter criteria and affordability certainly won’t recede overnight. Indeed, in contrasting evidence from the CML remortgaging fell by 24% year-on-year in October with house purchases falling by 16%.
Back on a positive note and there have been an increasing number of competitive remortgage deals recently through intermediary lenders, especially from Abbey for Intermediaries and Woolwich which are still available through TMA. But thanks to limited tranches these will not last forever. Influences such as the Bank of England base rate and house prices will also continue to have a major effect on the remortgage market.
And with the ‘silly season’ upon us I expect a host of conflicting predictions to emerge and work to further confuse any potential house purchase or remortgagee fence-sitters.
It is these factors that serve to highlight the importance attached to engaging with existing and potential clients in the right way and certainly continuing to maximise all aspects of the client meeting in terms of ancillary sales alongside any potential remortgage advice. Of course it remains to be seen exactly if and by how much house prices will fall and when and by how much the Bank of England base rate will rise.
Influences such as these are obviously out of our hands but proactively engaging with clients in a holistic manner should certainly remain on the agenda to help cushion any implications provided by these important external factors in the remortgage market and beyond.
