Remortgages and pent-up demand have had an impact, commercial director says
Pent-up house purchase demand has seen the industry start the year ‘with gusto’, according to Tim Hague, from April Mortgages.
Hague (pictured), who is commercial director with the new, longer-term residential lender, believes remortgages are boosting the market after a challenging 2023.
“2024 has started with gusto,” Hague told Mortgage Introducer. “2023 seemed to be dominated by product transfers which offered borrowers limited options and a challenging environment for brokers.
“This year, the house purchase market has seen some of the pent-up demand come through and brokers are looking at remortgages again as an alternative to product transfers. If the start of 2024 is a guide to the rest of the year, I think brokers are going to be busy.”
He continued: “The consensus seems to suggest that there might be a rate reduction later in the year, but swaps (swap rates) have been rising in recent weeks causing concern amongst brokers and borrowers that they need to act quickly to secure the best deals. The truth is nobody knows what rates will do.
“What we do know is that higher rates mean more affordability issues and some borrowers will want cheaper deals at all cost. But for those borrowers who want and need greater certainty, April offers flexibility that hasn’t really been available in the UK before.”
What could impact the mortgage market this year?
Though the year has started well, from Hague’s perspective, there are some key, external factors which could impact the market.
“In an election year anything can happen,” he reasoned. “A new UK prime minister and new US president may move markets in different ways.”
But regardless of who’s in power, there needs to be a consistent strategy to address housing issues, Hague believes.
“Housing needs a vision,” he suggested. “A sustained and long-term approach to housing policy would be a great start but at the very least we need some meaningful measures to help homeownership to be more accessible and affordable. We obviously believe that, longer-term, fixed rates can support that vision but we need to build more of the right type of houses.
“April will have become an established, additional solution that gives first-time buyers a leg up, and next time buyers and older borrowers the certainty to manage their finances and the flexibility to live their lives the way they want to without their mortgage getting in the way.
“I’m not aware of any mortgage lender doing what we are doing. Our longer-term fixed rates, from five to 15 years, provide the peace of mind that comes with greater certainty of monthly mortgage repayments, and much more flexibility than fixed rates have traditionally offered.
“With no early repayment charges (ERCs) for moving house, rates that reduce as the LTV reduces, and procuration fees that reward brokers throughout the life of the mortgage and not just at the outset, our proposition re-writes the rules for longer-term fixed rates.”
Read more: April Mortgages expands Stonebridge distribution
How can brokers add value to their businesses?
Hague considers that April Mortgage’s commission model allows brokers to embed real value in their businesses over the life of a loan. The business is also 100% broker-introduced.
“We’re working hard to dispel some of the myths and engrained thinking about longer-term, fixed rates,” he stated. “Changing market perceptions and then habits is key. We know brokers make the difference and so getting them to embrace our proposition is vital.
“If a borrower requires advice, for example if they want to borrow more for home improvements, we will refer them back to the broker who introduced their client to April. And, as the mortgage approaches the end of the product term, we will contact the broker at the same time we notify the borrower. So, we want to nurture long-term relationships with brokers who maintain long-term relationships with their clients.”
Hague urged the intermediary community to remember that there is not a one-size-fits-all approach to mortgages.
“Not every borrower is chasing the cheapest two-year deal,” he noted. “For some, peace of mind and a little more certainty amid all the turmoil is what they value most.”
April Mortgages is part of the DMFCO group, which describes itself as the largest independent asset manager of Dutch residential mortgages. It is committed, it says, to simplifying the mortgage process, and maintaining a customer focus.
It may be new to the UK market, but its approach has been tried and tested in the Netherlands, where it launched a lender called MUNT in 2014, and has already provided mortgages for more than 100,000 customers.
Hague has spent two years working with its team to shape its offering for the UK market. How challenging is it, then, launching a new business into the marketplace?
“We have a fantastic proposition and a distinctly different and exciting story to tell,” he said. “Volatile interest rate movements and a cost-of-living crisis mean the certainty we offer has real value. But, the flexibility of features like no ERCs for moving home and a lower rate as the loan is paid off means our mortgages are not so much a traditional ball and chain as a real, innovative financial tool to accompany borrowers as they move through life.
“It takes a little time to get traction in a busy marketplace and so that is what we are focusing on right now. But, we’ll do it in a managed way to make sure we continue to offer a great service experience.”
Drawing on his own business experience, Hague summed up: “Anything is possible if you set your mind to it. Don’t just do the same thing because it has always been done that way. If something doesn’t make sense, do something that does.”
