MBT Affordability Insights: Rising rates put greater emphasis on remortgage research

However, with increases in swap rates and lenders repricing frequently, how are brokers coping with those clients whose current deals are ending in the next six to nine months?

At the beginning of August five-year swap rates were around 2.4% and there was a possibility that there may be cheaper mortgage rates on the way once lenders had put the holiday period behind them. Since then, however, the Bank of England Base Rate has increased and there has been a steady increase in swap rates to nearly 3.7%.

Set against this backdrop, the remortgage market has exploded with clients who are understandably very worried about future rate increases and looking to find a way of ‘booking’ a fixed rate now. Who can blame them, as most will be coming off a sub-2% rate and are now staring down the barrel of a rate of 3.5% or even more?

The problem is that this spike in demand for remortgages has led lenders to increase their rates to stem the flow of business once again, leading to even higher rates.

It's verging toward a ‘Catch-22' scenario!

For some remortgage customers, a product transfer may look like the easiest approach in the current environment, but product transfer rates have also increased and many look uncompetitive against remortgage alternatives. Many brokers are not happy to lock their clients into these higher product transfer rates now, instead preferring to hedge their options by booking a remortgage rate and seeing how things develop. Even those clients not coming off their rate until 30th April 2023 can potentially be accommodated this way, with mortgage Offers lasting six months in many cases, and product transfer rates continuing to rise in line with remortgage rates.

The current rate environment is undoubtedly very difficult for brokers to negotiate, with a constant stream of rate increase e-mails coming through every day. These rate changes will impact affordability and are likely to reduce the number of remortgage options for a client, but options do remain and an affordability platform like MBT Affordability can help brokers to identify those options.

It's a broker's job to advise the best scenario for their clients. In the current environment, a product transfer may seem like the easiest route, but it may not be the best. Now, more than ever before thorough research is needed to help find the best route forward for remortgage clients.