26 July 2017
Recent data from the CML shows that property transactions have been relatively steady in 2017 at around 100,000 per month, with increased first time buyer activity offsetting more limited activity from homemovers and buy-to-let borrowers.
In the remortgage market, however, we’re seeing a different picture. The sustained low interest rate environment continues to support remortgage activity. Savvy brokers and borrowers are taking advantage of attractive mortgage rates to reduce monthly payments and lock in low rates for longer terms to protect against future interest rate increases.
And the good news is the remortgage activity already seen in the market doesn’t mean the opportunity has passed. Analysis from Virgin Money using CACI’s mortgage market database shows that there are around 3 million residential mortgages in the UK paying SVR. That’s almost one in every three loans, with outstanding balances of approximately £250 billion.
With an average SVR across the market of 4.62%, it’s easy to see why seven out of ten homeowners could reduce their monthly payments by moving from SVR onto a fixed rate mortgage. Many consumers are now used to switching car insurance, home insurance and utility supplier to save money. And the potential savings for simply switching mortgage are significantly higher.
The analysis also predicts £120 billion of residential mortgages will come to the end of their existing deal during the second half of 2017. So the opportunity for brokers to help existing borrowers looks set to grow. CACI data shows that borrowers with products maturing during the second half of 2017 could save around £770 a year on average by switching to a two-year fixed rate compared with their current rate. That’s a useful amount to put towards extending their loans to fund home improvements, reducing their mortgage term or simply reducing their monthly outgoings.
To help ensure you have everything you need to support your conversations with clients about switching their mortgage – whether that’s to Virgin Money or another lender – Virgin have created a Remortgage Zone on their intermediary website with useful information, sales aids and sample letters. Simply visit virginmoneyforintermediaries.com for details.