Rising rates offer remortgage opportunity By Sarah Davidson
Average mortgage rates went up across 2-year, 3-year and 5-year fixed rate products and 2-year and 3-year track- ers in February, figures from Moneysupermarket reveal – offering brokers a reason to contact clients about remort- gaging. The average interest rate
for 2-year fixed rate prod- ucts was 3.99%, 3-year fixes rose 0.04% to 4.30% from the previous month while 5-year fixed rates also increased 0.04% to 4.61%. Trackers also climbed during the month. Paul Hunt, managing di- rector of Phoebus Software, said the cost of funding for lenders was to blame. He said: “As LIBOR has crept up steadily since the final months of 2011, lenders have been forced to increase their rates but so far they have done so only modestly.”
SVRs rising too The figures came as 850,000 Halifax borrowers on the lender’s standard variable rate of 3.5% were told they face a hike to 3.99% by May this year. Halifax said the
change acknowledged that the cost of funding a mort- gage in today’s market re- mained significantly higher than the longer term average. Stephen Noakes, mortgage director at Halifax, said: “In light of market conditions, particularly ongoing higher funding costs, it has been necessary for us to review the Halifax SVR. At 3.99%, the rate more accurately re- flects the cost of funding a mortgage but it remains competitive for borrowers.”
Broker opportunity Brokers reacted with anger initially but many recognise the opportunity to help cli- ents remortgage. Ben Thompson, managing director of Legal & General Mortgage Club,
said: “The
wake up call to all borrow- ers is we are now in a record low and benign interest rate environment.
Whilst base
rate is unlikely to change this or even next year it is worth periodically checking in with an intermediary to see if a current deal can be bettered. Low rates will not last forever.”
Mike Fitzgerald, sales di- rector of Essex-based Emba Group, said the move offered a chance to review protec- tion cover for clients as well. And he added: “This is an ideal time for brokers to get in touch with all of their Halifax clients who are on the increased SVR and try to offer then a more competi- tive deal that is better than the Halifax’s current offering for existing clients.
“It will of course be more difficult to help clients who do not have much equity in their property and in many cases the client might be
better off remaining with the Halifax. Fees are still being paid on the Halifax fee free fixed rate deals and this will be helpful to clients who cannot move lenders for rea- sons such as recent adverse credit or employment sta- tus.”
Moneysupermarket
spokeswoman Clare Francis said a future base rate rise would have a real impact on 35% of homeowners’ financ- es. And a quarter of people say they would have to make cutbacks to their day-to-day spending if mortgage costs started to rise.
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MORTGAGE INTRODUCER MARCH 2012 5
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