Why 2022 presents a better opportunity than most

We are only a month into the year but it’s possible to see a number of themes emerging that are likely to become ever more important as the months pass by.

Related topics:  Blogs,  Mortgages
Mark Snape | Broker Conveyancing
3rd February 2022
growth puzzle team addition business
"I’m anticipating a very strong year for remortgage activity, and as advisers will know only too well, there are ancillary opportunities aplenty with every single remortgage client"

Interestingly, I write this just a few days before the next MPC meeting amid a growing expectation that Bank Base Rate (BBR) will be increased again in order to try and help ease inflation, although just how effective it might be remains to be seen.

After all, we have already heard that inflation is going to remain extremely high over the course of 2022, especially post-April when we are braced for those considerable rises to energy bills.

As we know, BBR increases don’t necessarily mean we’ll see matching price rises in the mortgage space, and given the competition we currently have, you would anticipate that deals for new borrowers will still remain historically low. Of course, rises in BBR do translate into lenders increasing their own SVR, plus those who are on variable rates, so will impact on the monthly costs for those borrowers.

Elsewhere, I sense a growing momentum around energy-efficiency, not least fuelled – if you’ll pardon the pun – by those extra energy costs, but also in terms of what the Government needs to do to meet its carbon emission targets.

The private rental sector is in the immediate ‘firing line’ so to speak, because new tenanted properties need to meet a higher EPC rating by 2025, and existing ones have a few years grace on top. However, getting some of those properties up to that level is not going to be simple and landlords might need to incur a significant amount of cost to do just that.

Where the private rental sector goes, the wider owner-occupier space is likely to follow, although again we’re unsure of the timescales involved here. Some lenders do appear to be grasping the nettle with an increased ‘Green mortgage’ offering, but a large number of these products appear to be rewarding those who already have the requisite EPC levels, rather than incentivising those who don’t.

It's interesting that all of the themes mentioned above play into a situation which might well require far more remortgage activity over the course of the year.

Clearly, we have those borrowers who are on variable/SVR rates, and despite our best efforts as an industry – particularly advisers – these appear to number well over two million. A number which doesn’t ever seem to go down. Of course, some of these borrowers won’t be able to move their mortgage, but many will, and the fact they remain on higher-cost rates is still somewhat bewildering.

Then we have the energy efficiency situation, and specifically for landlords I think we can all anticipate a time in the future when these borrowers will be looking to release equity in order to fund the cost of works which will be required to get their properties up to standard.

There is some suggestion that landlords simply won’t bother and will just look to sell up, however when property remains such a strong investment over the long-term, the benefits of holding a property and benefiting from strong tenant demand/rental yield/capital increases, may far outweigh the upfront costs of getting the home up to the requisite EPC standard. Especially if landlords can use increased equity to fund those costs.

Given what house price values have done recently, some landlords might be far more open to doing that work now rather than later, and there could well be a remortgage opportunity here, alongside the fact that landlords appear to still be in an acquisitive mood in terms of adding to portfolios.

Overall, therefore I’m anticipating a very strong year for remortgage activity, and as advisers will know only too well, there are ancillary opportunities aplenty with every single remortgage client, including the likes of protection, GI and conveyancing. That chance to review a client’s full and current financial situation should not be taken lightly, as each and every one will have some form of changed circumstances since they last remortgaged. Perhaps considerably changed as a result of COVID and the pandemic.

Moving them through the process smoothly and covering off all angles should be a theme for every year, but with some outside pressures, 2022 perhaps presents a better opportunity than most. Make sure you take it.

More like this
Latest from Property Reporter
Latest from Protection Reporter
CLOSE
Subscribe
to our newsletter

Join a community of over 30,000 intermediaries and keep up-to-date with industry news and upcoming events via our newsletter.