With Mark Carney’s recent remarks about a possible base rate rise, it is time for brokers to start discussing remortgaging options with their clients. Carney says a move could come at the “turn of the year” so advisers have a window of opportunity to talk through the different considerations.
To get the ball rolling, brokers should look at some of the sales aids developed by lenders. Virgin Money and Woolwich both have excellent online support items, which can show the impact of interest rate rises on existing deals as well as how remortgaging could be beneficial to homeowners.
For example, if the rate rose by 0.5 per cent, a client with a typical £150,000 mortgage would pay an extra £40 a month or £480 a year.
The FCA recommends stress testing at 3 per cent above the current rate for the first five years of the loan. If rates did go up by 3 per cent, the new average rate would be 6.24 per cent and this would add £258 a month, or £3,096 a year, to the average mortgage payment. With this in mind, advisers have the opportunity to both save their clients money and help earn their lifetime loyalty.
Brokers should also look at their own business registers to see when their customers’ deals will reach the end of their fixed-rate period. Business development managers at lenders can be helpful here by providing details of products reaching maturity.
With this insight, brokers will have the analysis to launch targeted marketing campaigns, helping them grow their businesses.