What better time find a new deal?
John Phillips is group operations director at Spicerhaart and Just Mortgages
The Bank of England’s recent interest rate cut prompted many lenders to reduce their mortgage rates to record low levels. In light of this, according to Legal & General, two and three year fixes have fallen by 0.2% since the beginning of 2016.
Despite this, many homeowners are finding that they are locked into fixed rate mortgages with comparatively high interest rates.
In fact, the Association of Mortgage Intermediaries says there are an estimated one million consumers in the UK who could claim to be trapped in a mortgage they are unable to get out of. It is clearly time for consumers to review their current mortgage deals.
However, the unpredictable and complicated nature of the mortgage market can often make the idea of switching mortgages a daunting task for many borrowers. Therefore, brokers shouldn’t assume the customer will pick up the phone to them. They must be proactive and check their back books to ensure clients understand their remortgaging options while rates remain low.
Our client services department is constantly speaking with clients who have reached, or are nearing, the end of their fixed rate period, to avoid them being shifted on to uncompetitive SVRs. Opportunities abound and it really is down to each adviser to make the most of every one, whilst ensuring their clients are in the best financial situation.
For some, the uncertainty of when the Bank of England is likely to put interest rates up is also a worry that they don’t need. Even if a fixed rate mortgage is not currently as competitive as an SVR, the comfort it brings is a factor that has more than monetary value. This is where a broker’s knowledge and their relationships with clients really comes to the fore. Brokers are in the ideal position to not only strengthen client relationships but to also talk to their clients about their protection needs, as many will have had a change of circumstances since taking out their mortgage.
It is clear that there is still competition among mortgage lenders to offer the lowest rates for those looking to remortgage, so what better time find a new deal? It’s now up to mortgage brokers to demonstrate how to take advantage of these low mortgage rates.
