If we were in any doubt about where advisers might be securing the bulk of their business from in the months ahead, then two recent missives from the Bank of England and Moneyfacts, should certainly dispel them.
Both the Bank’s quarterly survey of credit conditions and Moneyfacts’ own research highlights the growing strength of the remortgage market and how the industry as a whole might well be relying on it throughout the rest of 2019.
The Bank of England said that demand for remortgaging had increased ‘significantly’ in the first three months of the year and was expected to increase further during Q2.
While Moneyfacts said it anticipated the number of borrowers seeking to remortgage would continue to grow and that it anticipated a peak in October this year. It puts this down to the number of borrowers coming off two-year deals and the significant difference between these rates and the SVR they can expect to move onto.
Those borrowers who lapse onto an SVR might see their rates more than double, with the average two-year fixed-rate two years ago being 2.3% and the average SVR now being 4.89%.
Given this, it’s perhaps no wonder – and given the political sentiment we are all trying to cope with – that borrowers will not be inclined to move onto a variable SVR, when the remortgage market is still highly competitive and rates still historically low.
There’s an obvious need here however for advisers to ensure they are front and centre when it comes to those existing (and new) clients who will want to remortgage.
I’m sure we’re all acutely aware that the lenders themselves are likely to be contacting such clients way before the end of their deal to offer them follow-on, product transfer rates, and it’s therefore important clients know they should bring those offers to their adviser to make sure they are suitable for them, and that they secure advice based on their circumstances now, not two years previously.
In the hype of low pricing being offered direct, clients might forget how their situation has changed in the last year and a half, and that only by using an adviser will they secure recommendations for those changing situations/needs.
There is clearly a large amount of business coming up for renewal, and advisers will face severe competition to secure it, however with a strong communication process, and a strong message, there should be a very good chance not just to secure renewal business but also pick up new clients as well.
Richard Adams is Managing Director of Stonebridge Group