Remortgage market to stage renaissance

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Jonathan Hall Business DevelopmentDirector, Openconvey

The intermediary mortgage sector has waited a long time for signs of resurgence in lending activity.

But until now it has had to subsist on a starvation diet of strictly controlled prime purchase business, with a small portion of remortgage business.

Lending is still hugely restricted in its scope and attitude to risk, and uncertainty over house prices has not helped.

Yet there is no doubt of the pent-up demand for funding and the good news is that lenders I have spoken to all agree there will be more funds available next year. Hardly a guarantee I know, but a useful barometer nonetheless.

Also, hope is at hand in the shape of the remortgage market which will stage a renaissance because of two factors. First, inflationary pressure is building and it will become difficult to maintain the Bank of England bank base rate at its current level.

Thousands of mortgage holders on variable or tracker rates are going to become vulnerable when rates start going north. If you add this to the vast numbers who are going to come to the end of their fixed rates in 2011/12, then we are looking at the right conditions for a resurgent remortgage market.

The only question is when rates will start to rise. Unfashionably, I think it is going to come sooner rather than later and I would be taking a long hard look at my client bank before the new year and planning for an event that might be closer than you think.