Targeting the significant borrower cohort who have never remortgaged

When it comes to the number of purchase transactions currently taking place in the UK, I’m afraid the numbers do not lie.

The latest monthly figures from HMRC throughout 2023 show a marked drop on what was achieved in 2022, where every month breached 100,000. In 2023, the figures to date are well short of that, with most months being 20%-plus down on the same month last year.

Indeed, the past four or so months have been in the low 80,000s and, even the most optimistic amongst us, would probably concede that the rest of the year is unlikely to show a significant increase on this. In fact, there is a strong school of thought that might well argue that we are likely to dip further.

In lieu of that purchase business, all property market stakeholders - particularly advisers – will need to secure business via other avenues in order to make up for the activity that simply isn’t there in the purchase sector.

Remortgage business can of course fill such a void, and there’s no doubting that existing borrowers are likely to need advice in this market more than any others. The severe fluctuation, and increase, in rates we have seen over the past 12 months specifically, added to the cost of living crisis, mean that borrowers are much more likely to be coming off rates that are simply unachievable – and in some cases unaffordable – in today’s market.

That said, we have (hopefully) started to see a downward trend in rates, but even with these most recent movements, many borrowers are looking at a 2/3% increase on what they were able to achieve last time.

Helping existing clients is clearly a huge part of an advisers’ job, and I know there will be a significant amount of focus on this, especially as lenders will be targeting these customers with PT deals.

But, according to recent research from Uswitch, there is a significant borrower cohort who have never remortgaged and – as a result – are likely to be sitting on variable rates which, even in this higher rate environment, could be bettered and could save them money.

According to the statistics, 62% of low earners – defined as those earning £25k or less – have never remortgaged; the corresponding figures for middle earners – between £25,001-£45k – is 55%; whereas 46% of high earners – those above £45k – have also never changed their mortgage deal.

That is a significant number right across the board, and one would assume is a large pond of potential clients for advisers to be fishing in. The reasons given for this inaction are unsurprising – 74% of low earners say they are up to date with payments but believe they’re unable to remortgage, while 68% are not at the end of their special term and so also believe they can’t secure a remortgage just yet, even though you would assume many of those are within six months of the end of the deal and therefore are able to look at alternatives.

The point is that we need these borrowers to know that unless they use the services of an adviser the likelihood is they’re not going to know whether they’re eligible to remortgage or not. And if they don’t know then they of course are going to stay put, or move onto an SVR, or end up opting for a PT that doesn’t take their current needs and circumstances into account, could end up costing them more, and of course doesn’t afford them any of the protections that come with using the services of a professional adviser.

This is clearly a very significant and positive message for advisers to be getting across to these existing borrowers. The salary of an individual of course is relevant in terms of affordability, but it shouldn’t determine whether they see an adviser or not. Borrowers should not feel they are somehow outside the advice circle just because of their salary; advice is for all, and advisers are in a position to help many of those who clearly think they’re ineligible for a remortgage.

Of course, a greater number of remortgage clients provides the opportunity for a greater chance of securing ancillary income for the adviser by looking at their other wants and needs, and it may well be that you can cover these off, whether its protection or GI or conveyancing.

If you don’t get access to those clients, you don’t get any of those opportunities, so make sure you target your remortgage marketing message not just to those already on the books, but those large numbers who simply don’t know they have this option or feel they’re not eligible.

In a market such as now, where purchasing looks likely to bounce along the bottom for some time, cranking up the remortgage machine and targeting a much wider array of potential clients is likely to make all the difference. Not just to them but you as well.