Fixing new rates offers business opportunities, suggests CEO
Intermediaries need to fully understand remortgages if they are to ensure they survive in the current market, according to the head of a leading broker firm.
When new mortgage business may not always be forthcoming, Ahmed Bawa, CEO of Rosemount Financial Solutions (IFA), believes the remortgage market offers prime opportunities to review clients’ financial affairs and potentially boost income.
“I would argue that as a broker in 2024, understanding the remortgage process is imperative for survival in the current market,” Bawa (pictured) told Mortgage Introducer.
Remortgages have become a key area of the mortgage sector, of course, as customers seek stability in a market that, though now calmer, has been extraordinarily unsettled over the past few years. Despite interest rates rising since 2022, many fixed-rate borrowers have been shielded from these increases until this year.
According to price comparison website Uswitch, the first three quarters of 2024 will have seen 884,999 UK mortgages up for renewal. In Q3 2024, it is forecast that just over 283,000 UK mortgages will need refixing. Furthermore, the UK mortgage market is expected to be worth £216 billion in 2025, of which £58 billion will be dedicated to remortgaging - accounting for just over a quarter (26.9%) of the gross market value.
How can remortgages benefit brokers?
Bawa noted there had been increased business opportunities in 2024, though the levels were still not up to pre-rate hike levels. Remortgages present a fantastic opportunity to discuss a client’s wider financial situation, he said.
“Whether this is an existing client or new, a remortgage is the perfect opportunity for a mortgage broker to provide a holistic advice service, covering protection, general insurance, financial planning etc,” Bawa explained. “These present fantastic earning opportunities for advisers, even if they do not transact that other business themselves. Through a conveyancing partner, advisers can earn referral fee income when signposting their clients to a conveyancer for their remortgage.”
Many advisers who have entered the industry only in recent years, when the mortgage and property markets were buoyant with new business, may not have initially realised the significance of tracking client rate end dates or just speaking with clients on a regular basis, rather than waiting for the end of their fixed rate period. Bawa believes advisers should be contacting clients as many as seven or eight months before the expiry date of their mortgages.
“With most lenders allowing clients to action rate changes six months ahead of their current rate end date, it is imperative that advisers contact their clients as early as possible to discuss that rate review,” he observed. “Early and regular client contact is key. I think more can be done for advisers to understand the huge importance of client retention. Advisers should also use the support available either from their network, colleagues or mortgage club to get training and education where necessary.
“The real value advisers will be adding at remortgage for their clients now is the market research. Previously, when mortgage rates were in the low 1%s for most, clients were perhaps less worried about the other options and were happy with the similar rate being offered by their current lender, so opted to stay.”
With most clients’ product transfer rates higher now, Rosemount’s CEO emphasised the importance of reassuring them on the best deals available. Even when a remortgage is going through, it’s important to continue informing borrowers of rate reductions, Bawa said, and brokers should speak regularly with their lender BDMs. In his view, advisers struggling with reduced business enquiries, would regret the missed opportunities of clients who speak with another broker or directly sort their mortgage renewal with their lender.
Read more: How have fixed rate mortgage rates changed over the past year?
What is the future of remortgages?
Bawa said he believed that remortgage opportunities will grow for brokers.
“With advisers now understanding further the importance of client retention, it is expected that intermediated remortgage business will increase in the future,” he predicted. “Furthermore, we are starting to see lenders - who have previously not offered product switch options to clients - building this into their proposition, after seeing business leave their books and realising the need to develop and innovate in this area. This will present better options to customers when coming to the end of the current fixed rate period.”
Bawa suggested that as clients are now taking longer mortgage terms, up to 40 years, this would encourage longevity in the remortgage market for advisers.
“An interesting evolution we will see in the market as a whole is the introduction of lifetime fix mortgages,” he concluded. “It will be interesting to see what this means for brokers when recommending these products. Should these lifetime fix mortgages really take off, this presents an interesting challenge for brokers and their income, although I struggle to see rapid growth in this area without lenders presenting a good incentive to brokers.”
