It has been a strong year for remortgaging so far, with UK Finance reporting that there were 27,768 remortgage approvals in August, an increase of 15 per cent on the same period last year. What’s more, there are forecasts of an even more significant jump in activity as we close out the year.
According to figures from mortgage database CACI, around £35m worth of mortgages will be coming to the end of their initial fixed or variable term in the next couple of months.
That should be great news for mortgage brokers; an opportunity to reconnect with existing clients, outline why they don’t want to transfer onto the lender’s standard variable rate and help guide them towards the best remortgage option.
But all brokers know that while some borrowers will be open to remortgaging, a significant number will sit on their hands. That’s not because they want to wait out their options, holding back to see just what Mark Carney and the rest of the Monetary Policy Committee have in mind for bank base rate. No, they will avoid remortgaging because the whole process feels like too much hassle.
Let’s be honest, we all know that the mortgage process in its current form is a spectacularly unsatisfactory one, for brokers and clients alike.
A couple of years ago YouGov put together a report called ‘Mortgages: The Customer Experience’, looking specifically at how borrowers felt at different stages of the application process. It found that just a third of borrowers felt satisfied at the application stage, and that the further along the application process they went, the lower that satisfaction percentage fell.
Those figures should serve as an important lesson for those in our industry.
Having gone through the tedium and frustration of the initial mortgage application, it’s little wonder that many borrowers can’t face a repeat in order to remortgage, no matter how much they may save as a result.
It is in all of our interests to tackle this remortgage apathy, and to my mind the answer is clearly to remove the hassle from the application process. By preventing the whole process from feeling like a chore, we can ensure that borrowers are, if not enthused, by the idea of going through a mortgage application, then at least not actively irritated at the prospect.
I believe that greater use of technology is the key here. By allowing borrowers to do more from the comfort of their own homes, and at a time of their choosing, it will remove a lot of the hassle felt by clients. Similarly, being able to carry out much of the application on their laptop, mobile phone or tablet will also make the process feel more convenient. We have already seen NatWest launch the first paperless mortgage application – this isn’t some fad, this is the way that mortgages are going.
That is the thinking behind our own digital mortgage report, and the response we have had so far has been enormously encouraging.
A broker’s very reason for being should be to help their clients to make better decisions on their home loan, and to save money in the process. But only by recognising the very real flaws in the existing process, and finding sensible ways to tackle those flaws, can we ensure that as an industry we help even more people to save money on the largest borrowing they will ever take on.
The next generation of borrowers already do everything online and are utterly befuddled by how tech illiterate the mortgage industry is. It is long past the time for us to adapt and deliver the service they expect, not simply the one we are used to providing.
Pradeep Raman is founder and chief executive of Burrow