Caroline Havers, partner, client Relations, Salans solicitors Will the popularity of remortgaging continue if market conditions change? I think so, whether the economic climate remains stable or worsens.
If the climate remains benign, with interest rates and unemployment rates low, consumers will want to continue accessing the £2 trillion worth of equity that exists within UK properties. The attractive rates on offer will also make borrowing against equity much more attractive than an unsecured loan and the cost of remortgaging will not dissuade borrowers as most lenders cover fees.
A downturn in the economic climate must be seen against the backdrop of the stable economic climate of recent years – some of us can still recall the days of interest rates of 12% or even 15%. If interest rates rise by more than half a point over the next few months many homeowners will seek to remortgage in order to fix their mortgages for a fixed period, though probably not as long as Professor Miles would advocate. Three to five-year fixed rates will enable people to manage their outgoings with more certainty and still keep brokers happy with the prospect of repeat business.
The continued growth of the remortgage market is also likely to be spurred on by the lenders and brokers who use it as a means to increase their customer base and achieve growth targets. Consequently they will continue to bring attractive products to the market.
The final factor that will act to secure the future of remortgaging is that the process has become part of what consumers see as ordinary personal financial maintenance. Two decades ago a mortgage was for life but in the 21st century shopping for a better mortgage deal is seen as a sensible option to save money or release equity.
So whether rates rise or fall, I believe remortgaging will continue to grow and to offer increased opportunities to consumers, lenders and brokers.