COVER
REMORTGAGING
NERVY BORROWERS SEEK REMORTGAGES EARLY Rising interest rates and cost-of-living fears spur property owners to contact mortgage brokers well before their current deals end, Simon Meadows writes
A
s interest rates have escalated over the past year, so too, it seems, have the jitters of mortgage borrowers. Brokers are reporting that their clients are seeking advice on remortgaging well in advance of the ends of their fixed terms, in some cases more than six months before – even before mortgage advisors contact them to revise their deals. With the annual rate of inflation soaring, driven mainly by energy and food price hikes, the Bank of England has increased interest rates with worrying regularity since last December to what is now the highest level seen in years. This has left borrowers concerned that they may face eye-wateringly high mortgage repayments if they leave renewal too late. Further interest rate rises seem likely, with serious implications for the industry and potentially higher mortgage rates. This will do nothing, of course, to quell the fears of anxious property
“Since we’ve had the increase in interest rates and increase in inflation, it’s becoming more apparent that clients want to do something earlier” RUSSELL CLARK
34
MORTGAGE INTRODUCER NOVEMBER 2022
owners, who are tempted to switch to a cheaper deal before rates peak. Russell Clark, a senior mortgage advisor with Andrews, has witnessed a distinctive change in some borrowers’ behaviour. Where once he was making the first contact with his clients to remind them that their mortgage agreements were due to expire, now some are contacting him, many months earlier. “Since we’ve had the increase in interest rates and increase in inflation, it’s becoming more apparent that clients want to do something earlier,” Clark said. “People are worried about the cost-of-living at the moment – as the song says, ‘the only way is up.’ In real terms, we have had low interest rates for a while because of low inflation and COVID, so we have been in an artificially low place. “Clients are worried that over the next couple of years we are going to have issues, so they want the security of knowing that, if they can afford it [a fixed-rate mortgage] today, they can hopefully afford it over the next two, three, four years. They are looking at mostly five-year fixed rates.” Clark has over 20 years’ experience in financial services and completes around 100 mortgages a year, of which 25 to 30 per cent are remortgages. “We tend to contact our clients, on average, about four months before [their terms expire],” he explained. “We have a CRM system that will drop someone an email saying, ‘Look, you’re coming to the end of your fixed rate, do you want to have www.mortgageintroducer.com
