The Rapid Rise Of Remortgaging
1/03/2017 Jeremy Duncombe, Director, Legal & General Mortgage Club
The rapid rise of remortgaging was a key feature of the mortgage market in 2016. Last August, the market saw a spike in activity following the Bank of England’s announcement that it was to drop interest rates to 0.25%. This historic announcement pushed the mortgage market into unchartered territories and it was interesting to see how well the market responded to this change.
According to the latest figures from the Council of Mortgage Lenders (CML), remortgaging was up 14% in November 2016 from the previous year, totalling £5.8bn. At Legal & General, we expect these figures to continue to rise as shrewd borrowers take advantage of the opportunity to potentially save themselves thousands of pounds. Research from Legal & General Mortgage Club last year revealed that the ‘average’ borrower could save up to £2,000 a year just by moving from a lender’s Standard Variable Rate (SVR) to a more competitive product*. As a combined total across the UK, homeowners could therefore save themselves an impressive £3.9bn a year by switching their mortgage deals.
These staggering figures are set to increase throughout 2017, with research from TSB revealing that 31% of homeowners are planning to make the most of the low interest rates, and 25% of those are were set to do so last month. Homeowners who are considering remortgaging should get in touch with a broker as soon as possible to find out more. These advisers will be able to support them and offer them invaluable advice which will ensure that each individual borrower is on a favourable mortgage deal.
Remortgaging may be dominating discussion surrounding the mortgage market, but more still needs to be done to reach out to homeowners. Brokers should take the responsibility encourage borrowers to re-evaluate their mortgage deals, as many homeowners may not realise what is available in the market, or how much could be saved. Our housing market has experienced an unprecedented rise in house prices over the past couple of years, which means that many borrowers may find themselves in a different LTV band. For these borrowers, now is the perfect time to remortgage and switch to a cheaper charging band. The short-term process of changing a mortgage can seem like a daunting task for homeowners, but with the right support from a broker, they can reap the rewards in the long term.
*Legal & General Research, 2016- Figure based on all borrowers with a Standard Variable Rate switching.