View more on these topics

Benefit from the remortgaging trend

Many predict that 2008 will be an excellent year for remortgages and the sector has already got off to an encouraging start.

Recent figures from the British Bankers’ Association show a slight increase in total mortgage lending in January but a record-breaking 49% of approvals involved remortgage deals.

A report from Leadbay suggests the demand for remortgages has increased by 25% since October last year and has overtaken demand from first-time buyers for the first time.

Although the housing market has slowed, this rise indicates that many consumers are aware of the benefits of remortgaging and are looking to lower their mortgage rates at the earliest opportunity once their current discount or fixed rate deals expire. It also suggests first-time buyers are either still struggling to get on the housing ladder or waiting to see if house prices fall.

The increase in remortgage activity highlights the opportunity for brokers to generate repeat business from their existing client base. Brokers looking to retain clients when it is time for them to remortgage should maintain a database with borrowers’ details and their reversion dates.

Both parties should schedule follow-up discussions as clients’ fixed or discounted rates come to an end. In fact, it would make sense to discuss remortgage possibilities when initial deals are signed. This might seem an obvious way to retain business but according to Dunfermline, only 14% of its customers were retained by brokers after their initial rates expired. If this figure is representative of the market, it’s clear there’s money to be made here.

On the other side of the coin, borrowers who have outstretched themselves financially may struggle with higher repayments if they are not able to remortgage to lower rates. Some lenders have a limited amount of funds to lend at the moment and have been pricing products accordingly, with more expensive deals limiting the andy young is chief executive of The Business Mortgage Companyamount of business they do.

Lenders have also reacted to the liquidity crisis by making significant changes to their criteria, which may restrict the number of qualifying applicants. This could result in distressed sales and together with the slowing housing market, there will be opportunities to purchase properties at discounted prices at auction.

Another way for brokers to take advantage of market conditions would be to offer bridging finance arrangements. Bridging loans provide timely but short-term borrowing and are ideal for those looking to buy discounted properties at auction, with completion typically required within 28 days. But it’s advisable to approach traditional lenders quickly as bridging finance can be expensive over the longer term.


Arrears shoot up by 35% in first two months of 2008

Citizens Advice Bureaux says mortgage arrears have shot up by 35% in the first two months of 2008 compared to the same period in 2007.It says its latest research shows that more people are seeking help because they are having problems paying their essential household bills, such as gas and electricity, water, telephone and Council […]

JP Morgan buys Bear Stearns

Rooftop Mortgages’ owner Bear Stearns has been bought by JP Morgan Chase for the knock-down price of $2 per share.

Brokers advised to tap bridging loans demand

Brokers can help bolster the buoyant buy-to-let market with bridging loans, claims Blemain Finance.The firm says that total funds advanced on its bridging cases increased by almost 17% in September 2007 compared with the same period in 2006.Gary Bailey, director of Blemain Finance, says the figures prove the buy-to-let market is flourishing despite difficult market […]

Two MPC members voted for interest rate cut

Two members of the Monetary Policy Committee voted for a cut in interest rates of 0.25%, the MPC minutes reveal.John Gieve, deputy governor responsible for financial stability, and David Blanchflower preferred a reduction, compared to seven including governor Mervyn King, who voted for an interest rate freeze of 5.25%.The minutes show members discussed deteriorating prospects […]

UK: mid-year review and outlook

By Mark Martin, manager of the Neptune UK Mid Cap Fund, and Scott MacLennan, manager of the Neptune UK Opportunities Fund H1 2014• Equity markets continued to show strength: despite a strong rally in 2013 driven by a market-wide re-rating, equity markets continued to generate positive returns for investors. Economic activity continued to be stimulated […]


News and expert analysis straight to your inbox

Sign up