Number of remortgagors using brokers increases
- Borrowers seeking intermediary advice has risen by 8% in two months
- Continuous decline in ‘reactive borrowers’ as Britons take charge of mortgage finance – 47% borrowers remortgaged because their current deal had ended, down by 5% over two months
More than two-fifths (44%) of remortgagors consulted an independent adviser or broker in April, up from 39% in March and 36% in February, according to research by property services outsourcing company LMS.
Its customer survey also revealed that nearly two in three (65%) customers who remortgaged their properties in April did so in order to access lower mortgage rates, down from the 68% who did so in March.
Almost a third (30%) of remortgagors increased the size of their loan, with one in five increasing their loan amount by as much as £10,000. These numbers have however, fallen from last month by 1% and 2% respectively.
In addition, almost two-fifths (37%) remortgaged to reduce their monthly payments by up to £500 in order to free up cash. This was down from 38% last month, and 40% the month before.
Remortgaging also meant that 22% were able to fund home improvements, and one in ten could pay off other debts. A small number of homeowners also said they planned to use the money to fulfil their children’s ambitions of owning their home (2%).
Fewer people remortgaged because they were coming to the end of deal, down to 47% from 49% in March and 52% in February, which suggests borrowers are actively taking charge of their finances, and shopping proactively, not simply out of necessity.
Almost eight in ten (79%) borrowers who remortgaged ending up switching lenders to get the best deal available to them in the market.
The number of people who believe interest rates will go up has fallen to 15% – from 17% in March – in line with market expectations of a prolonged, record low Base Rate.
Andy Knee, Chief Executive of LMS, comments:
“The stringent lending criteria imposed by the Mortgage Market Review last year has driven more people to use the expert advice provided by specialist intermediaries to help them navigate the mortgage maze. Finding the best rate is only part of the battle, with brokers also able to help borrowers prepare for the more detailed checks and processes now required. As well as proving a useful resource for borrowers, brokers are also helping lenders handle increased levels of business.
“Fewer customers cited the end of their current deal as the reason behind remortgaging, which suggests they’re well aware of how to use their current deals to restructure and make the most of their finances. Gross remortgage lending is at its highest since July 2009* – this is clearly being driven by savvy consumers more aware of the economy, a boost in stability following the decisive election result and sunny prospects in the market for the rest of the year.”