Mortgage advisers report rise in remortgage enquiries as panic settles
The remortgage market is showing signs of resilience as the country settles in to lockdown measures and homeowners begin to shore up their finances, say brokers.
Online searches for the word remortgage were up 60 per cent in March compared to the monthly average, according to analysis of search terms by mortgage broker Private Finance.
A similar spike was seen after the General Election and the Brexit outcome was finalised.
Brokers say those online searches are starting to turn into enquiries, with remortgaging, product transfers, and further advances now making up the bulk of intermediaries’ business.
Chris Sykes, mortgage consultant, Private Finance, said: “Some people it seems are using their time at home to review their finances.
“With people looking to be more careful with money, we think there could be a rise in the number of people looking to remortgage to an offset mortgage, or debt consolidation after perhaps relying on a loan or credit cards to get them through this challenging period.”
Sykes also thinks there will be more borrowers wanting to switch to interest-only instead of taking a payment holiday.
Richard Wylder, mortgage and equity release consultant, Mortgage Market Place, has seen remortgage enquiries start to build after the initial wave of panic, caused by the spread of the virus and the government’s lockdown measures, has started to subside.
He says 95 per cent of enquiries fell away immediately after the lockdown announcement, and now he is around 50 per cent down on the usual level of calls and emails for the month.
“Remortgage activity is starting to pick up but the types of enquiries have changed,” said Wylder.
“I’ve had a number of homeowners asking if they can release equity to help their children financially during the pandemic and several enquiries from people who see opportunities in the stock market and want to release cash from their homes to invest in shares.
“Among these there will be some good cases to be written.”
Wylder has also been approached by borrowers looking for a new deal who have been unable to use their previous broker because they have been furloughed.
The recent drop in the Bank of England’s base rate to a record 0.1 per cent and spike in mortgage deals coming to the end of their fixed term are factors also underpinning remortgage activity in April.
Conveyancing panel manager LMS reported a 30 per cent month on month rise in remortgage instructions with legal firms, after business in March suffered. The firm said this was largely down to the number of early repayment charges (ERC) expiring in April. Some 11 per cent of all ERCs end in April 2020.
After the base rate fell twice in March, a mass mail out from banks to borrowers on a standard variable rates (SVR) informing them of the drop will prompt some to contact their broker to hunt for a new deal.
Jane King, mortgage and mortgage and equity release adviser, Ash-Ridge, said: “Remortgaging and product transfers are pretty much all of my business at the moment.
“I’ve got quite a large client base and we’re writing to people three to four months ahead of their rate ending so there is plenty time to get the deal ready.
“Because of the drop in the base rate we had a lot of clients asking to switch from a fixed rate to a tracker. The homeowners I tend to deal have large mortgages, so a switch from a fixed rate to a cheaper tracker can shave a couple of hundred pounds a month off their outgoings.”
But shortly after the Bank base rate drop lenders began withdrawing tracker ranges and repricing deals.
Despite the withdrawal, Jane says there are still “a couple of little gems” available.