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Why Brokers Should Prepare for a Surge in Remortgaging Applications 

With the combination of economic and global challenges hitting the property market hard, lenders aren’t just changing the cost of their products – in some cases, they’re pulling them completely, which is causing issues for brokers. In the past few months, there’s been a surge in remortgaging rates, as homeowners look to cut back and brace for a big squeeze with energy bills rising and inflation even higher. 

What’s causing the surge in remortgaging applications?

The cost-of-living crisis is affecting everyone in the UK, with the cost of gas and electricity up and many people’s finances already at their limit. The energy price cap rose by 54% back in April 2022, adding an average of £693 per year to the average household’s bills. While the price cap was brought in to prevent households from being ripped off by energy companies, it’s expected to rise again in October, putting further pressure on property owners. And with property prices hitting their peak, making it harder for people to get on the property ladder or move, it’s easy to see why so many people feel stuck with their financial situations. 

The cost of mortgages began to increase last year in advance of the Bank of England raising interest rates, but as the political issues around the world escalated over the past few months, the Bank of England has escalated its rate rises quicker than anticipated which has affected the mortgage market considerably. 

Saving on mortgage costs

Remortgaging is one way that homeowners are trying to save money every month, by releasing equity in their property. One of the primary reasons for people choosing to remortgage is to save money, with many people looking to cut costs on their monthly mortgage payments and hoping to relieve financial anxiety.  

For lenders, the motivation to accept remortgaging applications is to hang onto its customers for longer. Lenders seem to be offering appealing fixed rate packages while passing lower borrowing costs onto customers, which can be a welcome benefit for borrowers looking to remortgage to reduce their expenses. 

The increased need for support from family

Another factor contributing to the rise in remortgaging applications is the need for financial support from family for first-time purchasers. With property prices so high and rising inflation, along with energy costs impacting affordability, borrowers are becoming increasingly reliant on the financial support of parents or family members to complete their purchases. 

This may require homeowners to remortgage to release equity to help out relatives who now need larger deposits to complete on a home, especially now that financial schemes such as Help to Buy are coming to a close over the course of the next year. Brokers are likely to see an increase in people wanting to remortgage to release funds so they can help loved ones with the increased cost of buying a property. 

How can brokers support remortgaging clients?

With such challenging times ahead for homeowners, brokers need to be ready to support their clients through remortgaging applications. Many people may have experienced changing circumstances over the past couple of years and they may be concerned about their ability to improve their financial situation. Since many lenders have altered their criteria to maintain responsible lending, brokers need to be prepared for clients needing extra support over the coming months. 

Communicate regularly

Communication is essential for clients, and it can be good practice to suggest a mortgage review for clients coming up for renewal later in the year as well as those with deals expiring in the next few months. The process can take longer to complete if they have complex circumstances, so getting a head start on providing them with advice can make all the difference. Brokers should also be maintaining regular contact with clients, not just getting in touch when their deals approach expiration. Staying at the forefront of their minds can encourage them to get in touch and ensures them that you have their best interests at heart. 

Stay flexible and empathetic

It’s also important to be flexible and work around your clients. Some clients may be able to meet with you, but others may prefer a virtual appointment, so bear in mind that being more flexible than lenders can be an advantage that helps you add value as a broker. Be prepared to offer appointments in the evenings or at weekends around the clients’ work schedule to offer them availability that suits them and makes the process easier. 

Make better use of tech

Use technology to keep communications digital and build engagement with both existing and potential clients. Social media can be used to position yourself as an expert but also to help clients stay on top of the changing news as it’s these updates that will affect them in their attempts to remortgage or buy and sell property. 

Be the source of knowledge

Lastly, remember that clients may not know what options they have available to them and it’s down to brokers to make those options known to them, including product switches and remortgages. Brokers are best placed to offer this advice and help clients make the right choice for their situation, and that means looking out for them across the entire market, not just their current lender.  

Final thoughts

The state of the property market has been a rollercoaster for the past two years as a result of the pandemic, and with the added challenges of political issues around the world, the mortgage sector has had to make changes to adapt. For brokers, this comes with its own set of challenges in helping clients navigate a tougher landscape successfully. But with clear communication, better use of digital tools and a focus on flexibility to deliver an even more reliable customer-centric service, brokers can feel prepared for the increase in remortgaging applications.