Brighter prospects for remortgaging

11 January 2010

At this time of the year it is traditional for commentators to turn into the industry equivalent of Mystic Megs.

So looking into my crystal ball it seems obvious that the difficult market of 2009 will continue for at least the first half of this year. Indeed, in terms of business levels it could be a year of two halves.

The remortgage market in particular has taken a hammering in recent times. The bleak facts are clearly laid out in the Council of Mortgage Lenders’ lending figures for October.

Remortgaging was 52% down on October 2008, standing at just 33,000 loans. This is the second lowest monthly level since the CML began recording this data in 2002. But I suspect that come Q3 2010 brokers will be working in a much more healthy remortgaging environment.

Purchase activity will continue to dominate but we’re seeing a slight rise in remortgage business.

A more competitive 2010 remortgage market could come about for a number of reasons. First, those who took out mortgages in the past 18
months are likely to be facing steep reversionary rates when their deals finish.

And if we see the Bank of England base rate and LIBOR rising in the next six months these reversion rates will look even more uncompetitive and more borrowers could be looking to remortgage.

Meanwhile, there are more mortgages at higher LTVs available so there are more opportunities for borrowers wishing to consolidate their debt. All in all, the future of the remortgaging market now looks more orange than black.

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