"Little could we have known then just how much the remortgage landscape would change towards the very end of Q3 or how the value of intermediary advice would rise even further"
The Q2 remortgage review ended on highlighting how the advice process will play a key role in supporting an array of homeowners to review their options and in delivering the right solution to match their ongoing needs.
Little could we have known then just how much the remortgage landscape would change towards the very end of Q3 or how the value of intermediary advice would rise even further during such an uncertain economic period.
Now I’m not going to try and dissect current events as these are so fluid that any analysis may be outdated by the time I finish writing this article, never mind when you are reading this.
So, for the purpose of this piece I’m going to purely focus on trends leading up to the mini-budget and Q4.
Turning back the clock a little further, the Q2 Household Finance Review from UK Finance suggested that consumer spending patterns remained stable, but that the continuing cost-of-living crisis and interest rate rises would create significant pressures in the coming months.
Product transfers were reported to have fallen away in Q2, but external remortgage activity grew year-on-year. The review added that equity withdrawal at remortgage had fallen away following the end of the Stamp Duty holiday, but the amounts withdrawn for home improvement remained significantly elevated, reflecting inflation in this sector. It also suggested that product transfers and remortgage activity were expected to remain relatively strong until next year as 1.8 million customers reach the end of their fixed rate deals.
Moving into July, remortgage completions were reported to have increased by 41%, with homeowners preparing for future rate rises. This data from LMS showed that 88% of remortgagors expected further interest rate increases within the next year. 70% of those who remortgaged took out a five-year fixed rate product, the most popular product in July. However, LMS predicted a shift in the type of products being taken up in the near future as rate uncertainty continues.
August data from the Bank of England’s Money and Credit report showed that approvals for house purchases, an indicator of future borrowing, increased sharply to 74,300, up from 63,700 in July, and above the 12-month pre-pandemic average up to February 2020 of 66,800. This was suggested to be the highest level since January 2022 (74,500), and a notable rise following a downward trend over the previous several months. Approvals for remortgaging (which only capture remortgaging with a different lender) also continued to increase, to 49,400 in August from 48,400 in July. This was close to the pre-pandemic average in the 12 months up to February 2020 of 49,500.
Fast forward to the closing weeks of Q3, which saw the total number of remortgage searches in 2022 so far overtake the total volume of remortgage searches for the whole of 2021. This was according to figures from Twenty7Tec which outlined that there had been 5,615,206 remortgage searches – up to 29 September 2022 - compared to 5,440,414 spread across the whole of 2021. The year to date was said to have been marginally busier for purchase mortgage searches (up 3.72%) compared to the same period last year but 43.81% busier for remortgage searches YTD compared to the same period last year.
In short, Q3 has represented an extremely busy period for the remortgage market. At this point, the usual focus is on what to expect from the sector in next quarter but I’ll kindly refrain from that at the moment and simply let the upcoming data speak for itself in my next review. Until next time.
