Remortgage activity predicted to drive future business levels

Paragon’s Mortgage Intermediary Insight Report found that 74% of intermediaries believe that residential remortgage activity will be a key driver of business over the next 12 months, followed by buy-to-let remortgages (56%).

Other sources of future business include buy-to-let purchases (44%), first-time buyers (43%) and house movers (33%). Meanwhile, later life lending (33%) and equity release (21%) were also popular choices.

Remortgaging has been growing in prominence in the buy-to-let market this year as it marks five years since changes to mortgage underwriting regulations helped drive the growth of five-year fixed-rate mortgages.

As part of the research, brokers were also asked what changes, if any, they have made to adapt to this shift towards remortgage business.

41% of intermediaries said they are placing a greater focus on client communication towards the end of the mortgage term, with brokers proactively engaging with borrowers 4.5 months ahead of product maturity, on average.

A further 11% of firms reported having streamlined compliance procedures, while 6% have put in place dedicated advisers to deal with remortgage business.

Brokers also provided insight into client behaviour with regards to remortgaging, revealing that they think just over half (52%) of borrowers move to a new lender at product maturity.

Asked what they feel their client’s top priorities are when deciding to remortgage, product rate, product fees and ease were deemed to be most important to borrowers after being identified as the top three priorities by 91%, 63% and 45% of brokers respectively.

Richard Rowntree, (pictured) Managing Director for Mortgages, said: “In 2017 the introduction of new underwriting standards made five-year fixed-rate mortgages more popular amongst borrowers. With many of these loans now maturing, a rise in remortgaging was something we had expected and planned for.

“It is interesting to see that our experience has been shared by our intermediary partners and that many have been putting in place measures to adapt to this shift in business mix. Although rates and fees are unsurprisingly primary drivers behind borrowers’ decisions when remortgaging, we also see that aspects outside of cost, such as ease, speed and service, are also priorities. This highlights the benefit to the sector of improving the maturity and remortgage experience for customers.”