Prepare to embrace the return of remortgaging

But with two interest rate cuts in the second half of 2024 and more still predicted for this year, despite the ongoing challenges in the global economy, the affordability picture is improving for many borrowers, and there may well be scope for more of them to either save money or minimise any increase in their repayments by switching to a new mortgage lender when their current deal comes to an end.

And a record number borrowers will see their deals come to an end in 2025. Around 1.8m mortgage borrowers are set to roll off their two- and five-year fixed rates this year, compared to 1.6m who came off fixes in 2024 and 1.4m in 2023. Most of those coming off five-year deals will be faced with rates which are substantially higher than they have been paying since they fixed in 2020, before the cost of borrowing began to rise. Conversely, borrowers coming to the end of two-year fixed deals will mainly be looking at lower rates than they fixed at in 2023.

Many of them will have seen the value of their properties increase in the interim, as house price inflation has remained relatively strong throughout. Many will also have experienced a change in their personal circumstances in that time, be that work- or family-related. Many will be seeking a fully-advised remortgage, where a broker can take stock of their current financial position and shop around the whole of the market to identify the best solution for their needs.

Advisers need to be prepared for the coming surge in demand for remortgaging – and should embrace the opportunities this brings. PTs are generally quick and easy, but do not give a broker the chance to take a comprehensive look at their customer’s situation and advise them on all of their options, be that a change of deal type and/or behaviour.

For example, if a customer is coming off a higher interest rate onto a lower one, they could be encouraged to maintain the same level of monthly repayments and effectively ‘overpay’ on the new deal, with the chance of paying off the mortgage early and potentially saving thousands of pounds in future interest payments. Or, say they have been paying £1,000 a month for nursery fees and their child has just started (free) school, likewise they could use that money to overpay their loan and shift their debt earlier.

A return to remortgaging is positive for all. It should boost competition between lenders wanting to attract new customers, give advisers the opportunity to properly assess and fully advise more clients and give more borrowers access to the best solutions for their financial needs. Let’s embrace the change.

Paula John is a board member of the Society of Mortgage Professionals and director of Paula John Communications