The Future of Remortgaging

Content

• Datamonitor View
• Catalyst
• Summary
• Analysis
  • The level of remortgaging in the market has declined since its peak in 2007
  • Remortgaging gross advances have dropped less rapidly than house purchase advances
  • The decline in gross lending came as a result of a decline in all forms of lending
  • The buy-to-let market saw huge falls in gross lending between Q3 2007 and Q2 2009
  • Competition among lenders is low and is likely to remain so in the near future
  • The level of competition in the market is low but the re-entry of Northern Rock has boosted the market
  • The big lenders have been the most successful at attracting new remortgage business
  • Prior to the crunch lenders priced remortgaging deals to make minimal margins
  • The SVR has reached a point where it has become favorable for consumers to stay put
  • The average tracker rate is the most competitive rate but SVRs continue to fall
  • There has been some recent movement back onto fixed-rate deals
  • A dearth of remortgaging activity could hamper a recovery
  • Brokers are traditionally strong in the remortgaging market
  • Lenders in difficulty are paying borrowers to take their business elsewhere
  • Innovation in remortgaging has been minimal since the credit crunch began
  • Remortgage calculators are available on some websites
• Hsbc Has Reintroduced Its Rate Matcher Deal to Boost Remortgaging
  • Lenders have been looking to attract more borrowers onto offset mortgages
  • Lenders are offering four-year fixed terms
  • Banks are taking steps to reduce the costs faced by borrowers when remortgaging
  • Innovation is likely to return once the market has recovered sufficiently
  • Consumers are weighing up their options regarding remortgaging
  • According to some sources the number of consumers seeking remortgage advice has risen
  • over the last 12 months more borrowers switched than reverted to their standard variable rate
  • The share of new mortgages on new property is generally lower the more recently the mortgage was arranged
  • The majority of consumers do not intend to remortgage over the next six months
  • with falling house prices equity release has fallen
  • Consumers are substituting savings for paying off debts
  • Datamonitor forecasts that the market for remortgaging will recover during 2011
  • Recovery will begin in 2011
  • A rising base rate will see borrowers rushing onto fixed deals
  • There is unlikely to be a movement away from remortgaging products in the future
• Appendix
• Supplementary Data
• Definitions
• Equity
• Loan-to-value
• Title Insurance
• Methodology
• Forecasting Methodology
• Further Reading
• Ask The Analyst
• Datamonitor Consulting
• Disclaimer
• List of Tables
  • Table 1: Datamonitor forecast of remortgaging and the total mortgage market, 2007-13f
  • Table 2: Annual gross advances for house purchase and remortgaging, 2000-08
  • Table 3: Quarterly gross advances split by type, Q1 2005-Q2 2009
  • Table 4: Buy-to-let quarterly gross advances, Q3 2006-Q2 2009
  • Table 5: Remortgaging activity by brand of lender
  • Table 6: Average monthly rate for different types of mortgage product, January 2007-June 2009
  • Table 7: Number of different types of loan advanced on a monthly basis, January 2007-June 2009
  • Table 8: Action that best describes situation over the last 12 months
  • Table 9: The impact of the time when the mortgage was arranged on the type of mortgage activity
  • Table 10: Likelihood of remortgaging over the next six months
• List of Figures
  • Figure 1: Remortgaging gross advances saw a moderate fall between 2007 and 2008
  • Figure 2: The overall market peaked in Q3 2007 before falling away, remortgaging fell quickly from Q3 2008
  • Figure 3: Buy-to-let remortgage gross advances fell by 87% between Q3 2007 and Q2 2009
  • Figure 4: Barclays/Woolwich has been the most successful at attracting new remortgage business
  • Figure 5: The average standard variable rate has been lower than the average fixed rate since November 2008
  • Figure 6: The majority of borrowers are still taking out fixed-rate loans
  • Figure 7: Remortgage calculators facilitate the complex calculations involved in remortgaging
  • Figure 8: Woolwich outlines the differences between a normal mortgage and an offset one
  • Figure 9: over the last 12 months more borrowers remortgaged than reverted onto their lender's SVR
  • Figure 10: The share of remortgaging as a percentage of new mortgage activity has fallen in the last six months
  • Figure 11: Less than one fifth of respondents are likely to remortgage during the next six months
  • Figure 12: The total mortgage market will recover sooner than the remortgaging market