8 Skyline | Edition 6 | Autumn 2023
The mortgage market has seen sizable changes in 2023 , with an estimated 800,000 fixed-rate mortgages set to expire by the end of this year . Looking ahead to 2024 , an additional 1.6 million mortgages are expected to reach the end of their terms ( 1 ) . These numbers do not reflect any tracker , variable or buy-to-let customers with product deadlines , so this could in fact be an even greater remortgage market when including these potential customers .
The increased need for Product Transfers
These impending expirations create an environment ripe for mortgage refinancing activities . UK Finance predicts that product transfers in 2023 will amount to an impressive £ 212 billion , representing a remarkable 30 % increase from the figures recorded in 2020 ( 2 ) . The data continues to suggest the rise of product transfers , as UK finance also confirms a staggering 87 % of remortgagers are opting to stay with their existing lenders rather than exploring options elsewhere .
This marks a substantial increase from 80 % in 2021 and 73 % in 2019 ( 3 ) . The allure of product transfers lies in their convenience and security , as homeowners can avoid the complexities of moving to a new lender , which with current affordability challenges could be a concern for some individuals . The impact of the pressure customers are feeling , to fix a rate as quickly as possible , could also be playing a large part in this trend .
Although product transfers are an effective solution for customers , it is important lenders don ’ t forget their brokers still must complete extensive work for their customers , to ensure they ’ re placing the right deal and complying with regulatory requirements .
The lingering impact of the pandemic
For those looking to remortgage and capital raise , a common requirement is for home improvements . The Covid-19 pandemic changed a lot more than any of us could have predicted , but one of the biggest trends that arose from the lockdowns was the importance of making the most of our homes and gardens . According to recent research , nearly half of all UK homeowners spent money on home improvements during the pandemic , with an average spend of almost £ 2,000 . For those with equity in their properties , remortgaging to free up money to renovate has become a popular option ( 4 ) .
Then there are the customers who were financially affected by the pandemic , who have been joined by the many people affected by the rising cost of living . Some will need to remortgage for debt consolidation . The latest criteria index from Knowledge Bank provides valuable insights into the financial challenges faced by many in the UK . A persistent trend of ‘ missed or late payments ’ searches continues to dominate the residential remortgage sector , reflecting the ongoing financial burdens carried by homeowners . The index also reveals a notable increase in searches for lenders who support in ‘ capital raising for debt consolidation ’ ( 5 ) . This insight is also echoed in StepChange ’ s May Data Report which highlights the cost-of-living increase being the most sited reason for debt ( 27 % ( 6 ) ), which many are trying to tackle with gaining better advice and control of their finances , with options such as debt consolidation . Considering the cost-ofliving crisis , we are very likely to see this increase further , with customers seeking out brokers for their advice on how to better manage their outgoings and finances .
These trends present significant opportunities for mortgage brokers , with customer retention more important than ever .