The Future of Remortgaging

Table of Contents

DATAMONITOR VIEW

• CATALYST
• SUMMARY

ANALYSIS

• The level of remortgaging in the market has declined since its peak in 2007
  • Remortgaging gross advances have dropped less rapidly than house purchase advances
  • The decline in gross lending came as a result of a decline in all forms of lending
  • The buy-to-let market saw huge falls in gross lending between Q3 2007 and Q2 2009
• Competition among lenders is low and is likely to remain so in the near future
  • The level of competition in the market is low but the re-entry of Northern Rock has boosted the market
  • The big lenders have been the most successful at attracting new remortgage business
  • Prior to the crunch lenders priced remortgaging deals to make minimal margins
  • A dearth of remortgaging activity could hamper a recovery
  • Brokers are traditionally strong in the remortgaging market
  • Lenders in difficulty are paying borrowers to take their business elsewhere
• Innovation in remortgaging has been minimal since the credit crunch began
  • Remortgage calculators are available on some websites
  • HSBC has reintroduced its rate matcher deal to boost remortgaging
  • Lenders have been looking to attract more borrowers onto offset mortgages
  • Lenders are offering four-year fixed terms
  • Banks are taking steps to reduce the costs faced by borrowers when remortgaging
  • Innovation is likely to return once the market has recovered sufficiently
• Consumers are weighing up their options regarding remortgaging
  • According to some sources the number of consumers seeking remortgage advice has risen
  • Over the last 12 months more borrowers switched than reverted to their standard variable rate
  • The share of new mortgages on new property is generally lower the more recently the mortgage was arranged
  • With falling house prices equity release has fallen
  • Consumers are substituting savings for paying off debts
• Datamonitor forecasts that the market for remortgaging will recover during 2011
  • Recovery will begin in 2011
  • There is unlikely to be a movement away from remortgaging products in the future

APPENDIX

• Supplementary data
• Definitions
  • Equity
  • Loan-to-value
  • Title insurance
• Methodology
• Forecasting methodology
• Further reading
• Ask the analyst
• Datamonitor consulting
• Disclaimer

TABLES

• Table: Datamonitor forecast of remortgaging and the total mortgage market, 2007 - 13f
• Table: Annual gross advances for house purchase and remortgaging, 2000 - 08
• Table: Quarterly gross advances split by type, Q1 2005 - Q2 2009
• Table: Buy-to-let quarterly gross advances, Q3 2006 - Q2 2009
• Table: Remortgaging activity by brand of lender
• Table: Average monthly rate for different types of mortgage product, January 2007 - June 2009
• Table: Number of different types of loan advanced on a monthly basis, January 2007 - June 2009
• Table: Action that best describes situation over the last 12 months
• Table: The impact of the time when the mortgage was arranged on the type of mortgage activity
• Table: Likelihood of remortgaging over the next six months

FIGURES

• Figure: Remortgaging gross advances saw a moderate fall between 2007 and 2008
• Figure: The overall market peaked in Q3 2007 before falling away, remortgaging fell quickly from Q3 2008
• Figure: Buy-to-let remortgage gross advances fell by 87% between Q3 2007 and Q2 2009
• Figure: Barclays/Woolwich has been the most successful at attracting new remortgage business
• Figure: The average standard variable rate has been lower than the average fixed rate since November 2008
• Figure: The majority of borrowers are still taking out fixed-rate loans
• Figure: Remortgage calculators facilitate the complex calculations involved in remortgaging
• Figure: Woolwich outlines the differences between a normal mortgage and an offset one
• Figure: Over the last 12 months more borrowers remortgaged than reverted onto their lender' s SVR
• Figure: The share of remortgaging as a percentage of new mortgage activity has fallen in the last six months
• Figure: Less than one fifth of respondents are likely to remortgage during the next six months
• Figure: The total mortgage market will recover sooner than the remortgaging market