Brokers say remortgage boom is on the horizon

Brokers have forecast a remortgage boom over the next 12-24 months as the market gets closer to the first rise in base rate in over five years.

A report published by the Mortgage Advice Bureau last week predicted a rise in remortgage lending from £55bn in 2013 – across owner-occupier and buy-to-let remortgages – to a predicted £58.2bn in 2014, £69bn in 2015 and £80bn in 2016, as rising house prices and an increase to base rate attracts more borrowers back to the market. The report says 4.8 million “silent prisoners” have been stuck on their current deal due to negative equity or have lacked an incentive to move as they have been stuck on a low tracker deal or SVR.

The report says 27 per cent of mortgage holders are stuck on their current deal, unable to move home or look elsewhere for a better deal, ‘imprisoned’ by negative equity, worsened financial circumstances of tightened lending conditions.

Mortgage Advice Bureau head of lending Brian Murphy says: “Recovering house prices mean many homeowners will finally be in a position to re-enter the market for the first time in years with the equity needed to access new loans.

“Many more borrowers will want to position themselves on the most favourable deals before losing the advantages they have enjoyed in an era of exceptionally low interest rates.”

Perception Finance managing director David Sheppard says a boom in remortgages is likely sooner than 2016 as a result of continuing uncertainty around interest rates.

He says: “We will undoubtedly see a boom in remortgages I think over the next 12 months, let alone by 2016. I don’t think this will be led by the actual interest rate hike, but more so by continued uncertainty around when that will come.

“We saw in August that two MPC members voted for an increase and we are waiting to see how the committee voted this month and as that becomes more uncertain, borrowers will be increasingly looking to fix their rates again.”

Your Mortgage Decisions director Dominik Lipnicki says: “£80bn is not unrealistic at all. Over the next two years, we will see a massive rise in the remortgage sector. Of course it has a lot to catch up from 2008 and 2009 levels, but that is around the corner.

“The mainstream purchase market is moving again and I think from next year, we will really start to see remortgages take off again. There are some great products out there right now and with interest rates set to push up, all indicators point to a real boom.”