I’m sure that we’ve all seen the headlines and projected figures from a variety of sources around how much mortgage payments may rise for homeowners who have, or are about to, exit some of the lowest fixed rate deals on record.
There’s no getting away from how big a rate shock this will be for many mortgaged households across the UK. This is also apparent for landlords with existing buy-to-let borrowing commitments who are struggling to bridge this rate gap both in terms of rental calculations and in delivering good quality homes which remain affordable for their loyal, long-standing tenants.
The key to helping such borrowers is a robust and competitive remortgage market but, in the wake of market and swap rate volatility, this is still proving to be a difficult one for lenders, borrowers and intermediaries to navigate. Although strong levels of demand remain evident.
The latest data from LMS showed that remortgage instructions increased by 11% in May following a seasonal dip in April, even though 1% less remortgages completed in May and pipeline cases decreased by 2% month-on-month.
Breaking this down, 43% of borrowers increased their loan size in May and 50% of those who remortgaged took out a five-year fixed rate product. 29% said their main aim when remortgaging was to lower their monthly payments, the most popular response.
As we head into the second half of the year, the data also outlined that a big jump in instructions is expected as pipelines continue to swell. So much so that H2 2023 is widely anticipated to be the busiest in terms of product expiries since the 2008 credit crunch, with well over half a million people expected to remortgage.
This represents a substantial figure and despite a number of economic influencing factors, the lending community remains active in providing a variety of solutions which are specific to individual circumstances and in supporting those borrowers who each face their own unique challenges.
How to price products remains an obvious and ongoing issue. Especially for the smaller lenders who can easily be swamped with business and this will continue to be a tricky balancing act going forward. However, as a lender who remains committed to both the residential and buy-to-let markets, we fully appreciate the need to provide options where possible, even at the higher LTV bands.
In order to do this, I can only echo the recent sentiments of Kate Davies, executive director of the Intermediary Mortgage Lenders Association (IMLA), when she said that, as an industry, we need to avoid fuelling sensational headlines and knee-jerk reactions – and concentrate on focusing on practical help where it is needed most.
Key to this approach will be the highly valued support of an intermediary market who is playing such a critical role in helping homeowners and landlords to make the best decisions possible in what is an increasingly challenging financial climate. And this expertise will be needed more than ever in H2 as the remortgage market shifts gear yet again.
David Lownds is head of products and marketing at Hanley Economic Building Society