Being asked to contribute to a quarterly remortgage review offers a great opportunity to really highlight the huge swell of potential surrounding this particular marketplace but also offers the dilemma of exactly where to start. Of course this should be obvious, after all this is a quarterly review, but things are not always as simple as they may appear.
Within the mortgage market, like it or not, we’re constantly inundated with data, statistics and indices from a raft of sources. However, especially within the housing market, these are often based on differing criteria ranging from mortgages approved through to completed property sales. From asking prices through to estimated achievable selling prices. Then comes the question of exactly when they were completed, offered on, asking prices set etc, etc, as timeframes can often differ.
This can prove to be a minefield for consumers without them necessarily knowing it. I mean how many have any idea what specific part of the house buying/selling process each of these indices are based upon? Very few I would guess.
I’m drifting away from the original crux of this particular article. What I’m trying to say is that statistical data can sometimes serve to blur the lines a little and despite the raft of data delivered on an almost daily basis; this doesn’t always accurately reflect current market conditions and can lead to some misleading, but not necessarily incorrect headlines.
So where exactly do I start? Thankfully when we’re looking at the remortgage market there are fewer causes of confusion as we tend to concentrate on actual approval levels.
The only thing that may cause a few furrowed brows is the time taken collating/releasing this data and again how accurate it might be when reflecting on the current market. After all we’re all fully aware just how quickly the market can change.
As it stands at the time of writing, most of the official data we currently have access to only reflects the performance of the remortgage market from the end of Q2 and leading into Q3. So let’s start with that.
According to the Council of Mortgage Lenders, remortgage lending, unlike house purchase lending, saw a decrease in both volume and value in July compared to the same month in 2013. However, a month-on-month comparison showed growth in both number and value.
Homeowner remortgage lending in July totalled 25,100 loans advanced in the period, which signified an increase of 4 per cent on June but a decrease by 15 per cent on July figures for 2013. These loans totalled £3.9bn in value, an increase of 3 per cent month-on-month but a decrease of 5 per cent on July 2013.
Hot off the press is the CML’s August data which showed a disappointing 4 per cent decrease on July figures for remortgage numbers and a 5 per cent fall by value. These figures also reflected an 11 per cent drop in number when compared to August 2013 and a 3 per cent decline by value.
Looking forward though, it is certainly not all doom and gloom. A report recently published by the Mortgage Advice Bureau outlined that brokers have forecast a remortgage boom over the next 12-24 months. The report predicted a rise in remortgage lending from £55bn in 2013 - across owner-occupier and buy-to-let remortgages - to a predicted £58.2bn in 2014, £69bn in 2015 and £80bn in 2016. It also added that 4.8 million “silent prisoners” have been stuck on their current deal due to negative equity or have lacked an incentive to move as they have been stuck on a low tracker deal or SVR.
Much has been said about mortgage prisoners in the past and a decent proportion of this still rings true but thankfully due to some loosened lending restrictions and criteria, growing numbers are managing to escape onto some highly competitive deals. Of course these July and August figures still reflect some degree of MMR hangover and the subsequent ramifications but that’s not to say there is any lack of positivity in the air.
When presented in the written form the highlighted CML statistics hardly suggest a market on fire but with fixed rate ‘wars’ continuing to heat up and an interest rate rise still somewhere on the horizon, this is a market which is expected to see a rise in activity over Q4. In truth approval levels may not quite reach the levels that it’s current potential demands but will hopefully provide a solid step in the right direction.
After all we estimate there are currently 3.5m UK mortgage holders sitting on their existing lenders SVR and, according to recent CACI data, between November and March a further 417,000 will likely join them as they switch from an existing mortgage deal. This equates to £46.7bn worth of potential maturing remortgage business, so opportunities a plenty.
And it will be proactive intermediaries who are engaging in a strategy to contact existing or past clients about their remortgage requirements who will continue to benefit by strengthen long-term relationships and generate future additional revenue streams. Not to mention helping to boost remortgage approvals moving towards the festive period.
