they’re happy to draw in money from SVRs? On the one hand Which? revealed


that 20% of lenders had put up their SVRs while the Bank’s rate remained at 0.5% suggesting lenders are happy to leave borrowers on SVRs. On the other hand, the CML believes:


“Lenders are certainly trying to get borrowers off of their SVRs. There are however funding issues and the stricter criteria after the financial crisis doesn’t make it easier for borrowers to remortgage.”


Rate waRs Some lenders are certainly pushing the message that they’re going after the remortgage market. Barclays is one example. “The remortgage market continues to


be a huge focus for us, demonstrated by our Great Escape remortgage package. The remortgage market arguably continues to provide the backbone of the mortgage market but it is still a market whose potential remains untapped by many,” says Finlay. “Our research suggests that there


are still thousands of borrowers sitting on their current lenders SVRs, maybe waiting for the signs of an interest rates rise, who could benefit from escaping and switch to a more competitive mortgage deal. Since we launched Great Escape last year remortgaging has increased from a third of mortgage approvals in the market to almost half.” Whatever the efforts of lenders,


consumers are still in a difficult position knowing that an interest rate rise looms just beyond the horizon and many are trying to protect themselves but just aren’t getting the answer they’re looking for. “Lots of borrowers are approaching


lenders to switch to a deal and are being turned away,” says Which? “It’d be good if lenders were able to be more flexible however we’re not advocating for irresponsible lending. We wouldn’t welcome a return of the 100% LTV mortgage.” Talking about product design Tony


Ward says: “Lenders will use the two usual levers of pricing and credit criteria.


We have already seen a relaxation in both of these in recent months.” But he adds: “I’m not sure this is a


good idea and will be unlikely to lead to long-term profitable business in my opinion.” It’s easy at this point to say that the


picture for the remortgage market looks less hopeful than the one we had at the beginning of the year, but that wouldn’t tell the whole truth about where we are right now. Let’s be clear, it’s the residential mortgage market which is struggling.


the BRight side The biggest success story from the year so far has been the buy-to-let market. The barriers to house purchase have driven up the prospects of the private rental sector and thus buy-to-let mortgages and they need remortgages too. “The smarter way to look at this would


be to look at less well served segments of the market such as the semi-professional and professional landlords in the buy-to- let market and the super-prime markets for high quality borrowers who desire a large loan on a bespoke basis with tailored underwriting, these are by and large being handled by private banks and represent good quality credit and high potential earnings capabilities,” says Ward. Andy Young, chief executive officer of


specialist buy-to-let broker firm TBMC, offered this precious gem of good news. “Many buy-to-let customers entered


the market during the boom years, however the financial crisis has seen


numerous brokers leaving the market, many of which negotiated the original buy-to-let deals,” he says. “The effect is that there are now


a number of orphaned buy-to-let borrowers without their original brokers and are now looking for specialists who are still in the market for advice on remortgaging.” He adds: “There is a huge gap in the


market right now and given the strength of the buy-to-let sector, there’s a great opportunity out there for brokers who are looking to write more business.” Lea Karasavvas, mortgage broker


at Mortgage Force, has another view of securing business during tough times. “I am convinced the only way we


can survive in this job is by offering the correct and best advice to our clients and not doing a deal for the sake of it,” he says. “Best advice will always result in more referrals and that is how I see the broker surviving in this climate.” Consensus suggests that the next


interest rate rise will come in early to mid-2012 and remortgaging will surge in the run-up to it. This will make it easy for many to blame the current state of the remortgage market for suffering business, however it’s evident that there is an abundance of untapped opportunities which exist out there and are in fact thriving. Whichever avenues brokers pursue


to survive tough times, they’re sure to come out smarter and more resourceful than ever come the return of residential remortgaging. n


moRtgage intRoduceR AUGUST 2011 47


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