Remortgaging will be the bedrock of advice in 2022

For an industry which is sometimes overflowing with data, it’s not often you get surprised by some research and statistics but occasionally a news story will have you scratching your head wondering what is actually going on?

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Mark Snape | Broker Conveyancing
4th November 2021
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"If, as expected, 2022 does not live up to 2021 in terms of purchase activity, it is going to be the bedrock of mortgage advice – remortgaging – that is going to need to replenish the potential lost income."

That recently happened when Barclays suggested almost half (49%) of all homeowners have never remortgaged, in fact it said they’d never even looked at what other deals might be on the market, even though close to a third recognised it could save them money.

Further stats around a lack of knowledge about what an SVR is or what LTV is are perhaps not so surprising, but it’s very difficult to understand why a borrower who is likely to be on a lender’s SVR, and who recognises there is money to be saved, doesn’t at the very least go out and seek the services of an adviser.

Delving a little further into the stats reveals that 46% of people do ‘whatever their mortgage broker tells them’, which again sounds bizarre because that’s exactly why you would use an adviser in the first place - to have them recommend what the most suitable deal is for you. Why that number is so low is perhaps the surprising thing.

What are the other 54% doing? Ignoring what their mortgage adviser is telling them? Perhaps that’s why so many are not remortgaging?

These sort of stats can seem somewhat muddled and may need to be taken with a large pinch of salt, but there is a fundamental issue to be addressed here, and that is clearly around borrowers not moving their mortgage when they are able to do so.

Barclays suggests the average UK adult has been paying a mortgage for over 13 years. Even if they had somehow been advised to take out a five or 10-year deal at the outset, it still means that a considerable number have been on an SVR rate for at least three years, possibly eight, and more probably 11, with all the extra cost that brings.

Now, there might be an argument to suggest some borrowers don’t think they’ll be eligible for a new mortgage and are deciding to stay put. But, again, the research suggests these homeowners are not even looking at their options, let alone using the services of an adviser to see what is available for them.

If this is anywhere near a true picture, then it should leave us all with a sour taste in the mouth. Indeed, part of me wonders why a lender has even highlighted it, especially a top six one who is perhaps benefiting from having large numbers of borrowers on their SVR, and wouldn’t want them to move.

Then again, perhaps this is a truly altruistic approach (!) and they are genuinely concerned certain borrowers are not ‘shopping around’. Perhaps they realise that by securing more remortgage business, there is a greater chance of those borrowers sticking around on an SVR after the special rate has ended; after all, that reliance on borrower inertia is baked into most lender’s profit margins.

What we can say is that there is clearly a substantial pool of mortgage borrowers who are paying far too much and need help to save money. That opens the door for advisers to make their case on a wide scale. If, as expected, 2022 does not live up to 2021 in terms of purchase activity, it is going to be the bedrock of mortgage advice – remortgaging – that is going to need to replenish the potential lost income.

Add in the ancillary income that can be achieved with every single remortgage client – namely protection, GI, conveyancing, legal services, and the rest – and it will be possible to see the full benefits to your business with each and every new piece of remortgage business.

Plus, at a time when the cost of living/inflation is rising significantly, why wouldn’t borrowers want to save some money on what is likely to be their biggest single monthly outgoing, and help offset those price rises? Even with rates beginning to inch up slightly, there is no comparison between the special deals available and SVR. I think we all have a duty to bring the number who are sitting on a mortgage and doing nothing about it down significantly.

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