The cut to Bank base rate has encouraged remortgaging, in both the owner-occupier and buy-to-let sectors
Much expectation seems focused on the remortgage market and its ability to deliver for all stakeholders until the end of the year and beyond.
There has been a clear shift over the past six months or so, with the once all-encompassing purchase market drawing back into itself, fuelled by the twin prongs of stamp duty increases and post-EU referendum uncertainty.
Now the focus is on remortgage in both the owner-occupier and buy-to-let sectors. The anticipated drop in buy-to-let purchase activity does not appear to have been mirrored by a significant boost to first-time buyer sales and, across the board, many potential vendors and purchasers are weighing up their options rather than acting.
The good news is that the cut to Bank base rate has encouraged greater interest in remortgaging, and pricing remains ultra-competitive off the back of it. The worry that lenders would not pass on the base rate cut seems to have been headed off at the pass by the introduction of the Term Funding Scheme – to the extent where lenders are awash with term money they have to advance.
The big question, however, is: does the demand exist, and what will lenders do to make deals? The MMR impacts considerably in this area and, if you add a fall in buy-to-let, it is understandable why lenders may be looking at areas they would not have countenanced 12 months ago. Perhaps this is why the FCA has been so vocal recently on a return to adverse lending and its understandable distaste for it.
For brokers, however, the remortgage opportunity seems credible, especially if we are doing the oft-compared SVR versus new-deal rates. While lenders have lowered their SVR, when compared to rates barely above 1 per cent or long-term deals not far above 2 per cent, it is an obvious no-brainer.
Remortgaging will be a priority for many lenders over the next 12-18 months and that should make it a priority for you. Whether it is the only saving grace during that timescale remains to be seen.
Rob Clifford is Group Commercial Director at the SDL Group, a shareholder at both Stonebridge Group and Moneyquest