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In an environment marked by higher interest rates and the lingering effects of the cost of living crisis, the role of advisers in providing reassurance and practical guidance has never been more important.
Higher rates causing worry
In recent years, the UK mortgage market has seen the average two-year fixed mortgage rate rise from 2.34 % in December 2021, to 4.59 % in July 2024( 2). While rates are certainly more stable than in the previous 12 months at highs of 6.86 %, the increase may be a worry for those who were previously on lower rates.
With energy bills predicted to rise again during winter( 3) and the cost of living crisis continuing to strain household finances, homeowners will be evaluating how to manage monthly expenses. With that in mind, the prospect of higher mortgage payments can be particularly daunting.
Advisers must be a source of reassurance
Amidst a market full of its own challenges, advisers play an indispensable role to help their clients navigate the market to get the best deal when remortgaging.
For example, advisers have access to a wide range of mortgage products and will have a strong understanding of the latest market trends. Advisers should be offering clients a comprehensive view of their available options, including fixed, variable and tracker rates, ensuring that borrowers can make informed decisions based on their own financial situation.
Advisers that understand a client’ s position will be able to assess income, existing debt, and future financial goals to point them towards the most suitable product. Given the remortgaging process can at times be quite overwhelming, those advisers that offer clear explanations and demystify complex terms will be a steadying hand to build client confidence and make the process less intimidating for homeowners.
Making the right choice between remortgaging and a product transfer
When advising clients on their next mortgage deal, a critical element will be helping clients to understand the difference between a product transfer and remortgaging.
... advisers play an indispensable role to help their clients navigate the market to get the best deal when remortgaging
Product transfers could be more suitable for those clients looking for a swift move onto a new rate, as the new mortgage deal is with the same lender and there is no need for a new affordability check when there are no other changes. The process will often be quicker and involves less paperwork than remortgaging, and also alleviates the stress associated with using a new lender as the product transfer is guaranteed, subject to meeting applicable criteria.
At Coventry for intermediaries, we want our product transfer process to be as simple as possible to help you, our trusted adviser partners, to navigate the end of your client’ s product term. For example, our MSO portal does not require clients to provide a signature when submitting like-for-like product transfers, helping the process to be as streamlined as possible.
In some cases, remortgaging may be more beneficial as it can provide potentially better rates or more suitable terms, though it requires a more thorough application process. Remortgaging can be beneficial for clients looking to consolidate debt, release equity or find a more competitive rate. Advisers are in an excellent position to weigh the pros and cons of each option for clients, ensuring that they choose the path to best align with their financial needs and goals.
Advisers who remain informed about the latest products and trends are invaluable. Ultimately, the adviser’ s role extends beyond simply finding a good deal – it involves providing stability, reassurance and effective guidance to make their clients feel supported and confident when finding a new mortgage deal. Those that provide tailored advice and guide clients to the most suitable products will see the benefits in improved client retention and loyalty.
coventryforintermediaries. co. uk
Sources: 1. CACI data 2024
2. https:// hoa. org. uk / advice / guides-forhomeowners / for-owners / mortgage-rate-forecast /#:~: text = On % 2019 % 20 June % 202024 % 2C % 20the, rate % 20( SVR)% 20 is % 208.18 % 25
3. https:// www. bbc. co. uk / news / articles / c6pp2jdz2pdo