"Rates are heading north, which is only going to focus the mind of borrowers on variable deals as well as those whose fixed rates are nearing expiry."
Even before the base rate decision was announced, we could clearly see the impact of that speculation on the pricing of mortgage rates. Research by financial information site Defaqto noted that in the week preceding the base rate decision, the number of sub-1% deals on the market crashed from 82 to just 22.
The message is pretty clear. Rates are heading north, which is only going to focus the mind of borrowers on variable deals as well as those whose fixed rates are nearing expiry.
Brokers therefore will have no shortage of conversations with their clients about moving to new deals, whether that be through a product transfer or a remortgage.
Is a product transfer the right choice?
There will be some occasions when a product transfer is the best option for a client. For example, their circumstances may have changed since taking out the initial mortgage, meaning that they would struggle with the affordability tests of a rival lender. Since those affordability tests are not part of the product transfer process, it can make sense to remain with the existing lender, and simply transfer to a new deal.
It’s also true that some lenders have recognised the need to deliver competitive rates on their product transfer deals, meaning that moving to a new deal with the same lender can provide tangible savings.
The appeal of a product transfer for brokers is also rather different today given the fact that lenders now, quite rightly, pay a proc fee on product transfers.
Yet brokers know full well the value of holistic advice, the importance of considering all of the options open to a client in order to really establish the best move. And that means giving remortgage deals their proper due.
The need for speed
One of the reasons often given for promoting a product transfer is the speed taken to conclude the deal. And it’s true that product transfers are often a speedy choice, which will always add to their appeal for clients facing a tight deadline.
Yet dismissing remortgages on the basis of speed alone would be a mistake. Working with the right legal partners can ensure that your client’s remortgage case completes in a speed comparable to a product transfer. At eConveyancer, we’ve worked hard to establish Rapid Remortgage, a service which dramatically cuts the time for qualifying remortgage clients to get their deal over the line.
Qualifying clients are sent a starter pack, and once this is completed and returned, the case is made ready for completion by the end of the next working day. We have seen full completions take a paltry four days, a timescale that more than holds its own against product transfers.
Finding the best rate
What’s more, while some lenders deliver great product transfer rates, that certainly isn’t the case across the board. There are plenty of clients who aren’t limited to product transfers due to affordability test concerns, and who could find a far better deal by remortgaging than by transferring to a new deal with their existing lender.
Even if they face something of a tight deadline, they can still make the most of a remortgage and save more in the long run as a result.
Offering options
One of the biggest selling points of any mortgage broker is the fact that by making use of their services, the client enjoys more options than if they tried to secure a mortgage alone. By picking the right partners, brokers can ensure that their clients enjoy the widest possible range of options when the time comes to refinance.
