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Kensington’s Alex Hammond says the
impact of this has been significant. “The single biggest factor stopping
people from remortgaging is probably inertia,” he says. “Kensington recently carried out research among our intermediaries that showed over half of brokers do not expect the amount of remortgage business they write to increase until after the first Bank Base Rate rise, which may not be until 2012.” But while some are indubitably choosing
to stay on SVR, brokers say others don’t have a choice. “Without a doubt the biggest hurdle for
borrowers trying to remortgage is a combination of their LTV status and very tight lending criteria,” says Dominik Lipnicki, director at Peterborough-based broker Your Mortgage Decisions. “Lenders are still cherry picking business that is completely clean with plenty of equity.” Stockton says the low levels of
remortgaging are down to a combination of things. “A big hurdle for the remortgage market
is simply customer inertia,” he says. “Whilst lenders’ standard variable rates remain low and the differential in a fixed or variable product is not clear cut, customers are often left asking whether it’s worth the effort. “Repayments are borrowers’ main focus
and many remain unconvinced moving off SVR will result in a significant difference in repayments. “Additionally with limited house price
growth, the subsequent potential issue of LTV due to the level of equity versus pay rate remains the main hurdle for borrowers. “Whilst we are now seeing a rise in
lender competition and a welcomed boost in the number of competitive products available, the lack of extremely attractive products available to those that require products at 75% LTV or higher means that the customer incentive to re-mortgage is reduced.” Sally Laker, managing director of
Mortgage Intelligence, agrees. “Many people don’t want to remortgage
out of the exceptional rate that they have ended up with as a result of the credit
32 mortgage introducer AUGUST 2011
by Robert Sinclair, Director, AMI
Never in living memory has there been a greater need for consumers to sit down with a broker who can look across the market to ensure that they have a realistic chance of obtaining a mortgage. This is even more the case to ensure that the products recommended are the most cost competitive available.
With only 17% of best buy products available to the 34% of borrowers who have a maximum of a 10% deposit, many prospective borrowers are likely to be disappointed in their search for a loan. Indeed, the 21% of the market with a 5% or less deposit only have access to about 2% of the available loans.
crunch and even if they did feel they wanted more cash, they do not want to lose that rate,” she says. “They have resisted the temptation to remortgage unless they really need to.” There are options available for people
sitting on SVR, worried about rates rising and concerned they may not be able to remortgage. “Several lenders seem to be trying very
hard to help clients who do not fit into the standard box,” says Mike Fitzgerald, director at Essex-based broker Brentchase Financial. “Amongst these are lenders such as Precise Mortgages, Aldemore and Kensington. “They seem to be trying to understand
clients who may be considered marginal whilst acting within the tight constraints of the current lending situation. Hopefully other lenders will start to become more flexible when dealing with the self- employed and others who may have small problems.”
First-time Buyers While affordability is certainly an issue for would-be borrowers, mortgage rates are now so low and rents so high in many areas of the country that monthly housing
There are a large group of customers
who, when they ask a high street lender for a mortgage, will meet with a firm refusal. The criteria being applied in those organisations are exceptionally tight. Any consumer who has visited a branch or a bank call centre will probably walk away thinking the mortgage market is closed to them. Good brokers know that this may not be the case. All of this means that consumers need advice more than ever. There is such a gap between the needs of most people looking to borrow and the loans available directly from the main high street lenders, there has never been a better time for brokers to show their value. We are living through very challenging times where the need for good financial advice will make a significant difference to the long-term financial well-being of those who receive and follow it.
costs would be more affordable for homeowners. The June Building Societies Association
property tracker found that the top three barriers to property purchase were raising a sufficient deposit, access to a large enough mortgage/access to a mortgage at all, and lack of job security. The biggest of the three is the deposit. “Deposit, deposit, deposit,” says
Stockton. “The key obstacle for first-time buyers remains the level of deposit. “Whilst encouragingly there are now a
number of more competitive 90% LTV products available there is strong evidence of ongoing customer appetite for higher LTV products. “We really need 95% LTV products and,
though it is encouraging to see a few lenders offering 95% LTV, access remains extremely limited with borrowers restricted by tight lending policies and the need for a high credit score.” Indeed, Moneyfacts research reiterates
this point. “While there are 35 products available to
borrowers with a 5% deposit, all but three require a guarantor, or for you to live within a restricted lending area,” explains
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