"Thankfully, as we move further into Q2, we now appear to be sitting in a far more stable economic and mortgage market landscape."
The beginning of any new year marks a new dawn and a new day. In more recent years, the sheer volume of activity across the mortgage market has transcended some of the more seasonal dips of late December and early Jan and the festive period has remained a busy time for lenders and intermediaries.
However, in 2022, I think it’s fair to say that Christmas and the New Year signified a timely and well-earned interlude for the intermediary market and provided moments in which to decompress following a particularly challenging time. And to also gear up for a year where more borrowers than ever, new and existing, are likely to rely on the advice process to help them navigate some potentially tricky times.
From a remortgage perspective, this reliance will certainly be evident as huge numbers of borrowers are coming off some historically low fixed rates. Although, and unsurprisingly, to reflect a slower Q4 period and lingering mini-budget ramifications, 2023 kicked off with low levels of remortgage approvals.
Money and Credit data from the Bank of England for January outlined that approvals for remortgaging with a different lender fell to 25,400 in January from 26,200 in December, the lowest level since July 2012.
In sharp contrast and on a much brighter note, figures from LMS showed that remortgage instructions rose by 33% in January as rates fell for the first time since September. 25% more remortgages were reported to have been completed in January, although pipeline cases decreased by 11.9% month-on-month.
Moving into February, additional data from LMS suggested that remortgage instructions had increased by around nine per cent, but completions fell by around a third (31%) and cancellations rose by around 0.35% to 4% as people tried to secure better pricing. A combination which represented something of a mixed bag for the sector.
LMS’ February Remortgage Snapshot suggested that more than half of borrowers opted for a five-year fixed rate over the course of the month, with around a quarter choosing a two-year fixed rate. Around 13 per cent selected a tracker and only three per cent chose a 10-year fixed rate. The Snapshot added that the majority opted for security over monthly payments, with over a quarter respectively citing economic concerns and worries about job security leading them to want to lock in a fixed rate now.
More positive news did emerge in March, with the final month of Q1 reported to have experienced the highest-ever volume of remortgage searches in a single month on Twenty7tec's platform. In March 2023, there were said to have been 69.3% more remortgage searches than in March 2020, the month in which the UK went into lockdown. The data went on to add that nine of the busiest ever 12 months for remortgaging have been in the past year.
Sneaking a quick peak into Q2 2023, ONP Solicitors highlighted further highly encouraging indicators for the remortgage market after revealing that it had processed more than 3,000 remortgage transactions on a single day - Monday 3rd April. With the firm suggesting that more than 1.5m five-year fixed rate mortgages are set to reach the end of their fixed period in 2023, ONP highlighted that this is just the “beginning of what is to come this year.”
Thankfully, as we move further into Q2, we now appear to be sitting in a far more stable economic and mortgage market landscape. A landscape which is likely to generate a host of remortgage opportunities as homeowners become more accustomed to a new interest rate environment which is highly unlikely to experience the rate swings of late Q3 and early Q4 2022.
As further competition emerges from a lending community with a growing appetite for business, we are likely to be see some increasingly attractive options emerge for those homeowners who, quite rightly in many cases, adopted a wait and see attitude. And for advisers to demonstrate why the advice process is so highly valued.
