I’ve been involved in a number of panel debates recently for various intermediary events, and one of the most frequently discussed topics is ‘What will be the size of the UK mortgage market this year and how much of that will be Product Transfers?’ And whilst there has been a range of answers given (and a number of disclaimers!), we are seeing that the proportion of product transfers being written by intermediaries is increasing (one of our largest distributers recently revealed that it had risen to 33% of their business written).
For us at Skipton, we can see large spikes of product maturities towards the end of 2023 and the beginning of 2024 and as we write to customers six months from maturity, conversations in households will be happening now as to their next steps. With the significant rise in interest rates over the last number of months, the majority of these customers will experience ‘rate shock’ and therefore their need for good advice will never be greater.
So, what have these maturing clients missed?
They say that a week is a long time in politics – well, if that is the case, then 2 years or 5 years must feel like an absolute eternity in the mortgage market. These large numbers of borrowers who will be coming off their fixed rate deals will potentially see a significant impact on their monthly mortgage payment and also may have more to consider than just which new rate they should choose.
It could be that the last time they discussed their mortgage requirements – lockdown or furlough weren’t in the vocabulary, the cost of living and energy bills seemed 'normal', also the prime minister and chancellor hadn’t asked for a meeting with lenders to discuss the rise in interest rates. With lenders amending their treatment of income and affordability along with their criteria continually changing, the options for a client must appear to be daunting.
Making things easier for you
However if staying with Skipton is the right advice for your client, what do we do to make it beneficial for the customer and easier for the you, the broker:
- Ability to switch deals during the 6 month maturity period – we recognise during times of interest rate volatility you may wish to replace a deal that has already been chosen. Simply let us know the new product transfer that has been advised.
- Choose from our core range or retention range of products – your Skipton customer is eligible for deals that we have for new borrowers, giving you a wider range of products to choose from.
- Additional borrowing – your client may wish to increase their mortgage. This can be done as part of the product transfer or standalone (and we have specific products should the additional borrowing be for green purposes). We pay 0.3% for residential and 0.35% for Buy to Let product transfers and all can be done on our eMortgages platform.
Looking after the customer
We’re all aware that the last few years have been a turbulent time for everyone, particularly those with borrowing and we feel that as a mutual organisation we do the right thing for customers. We made it easy for borrowers to request a payment holiday during lockdown and going forward we have signed up to the Mortgage Charter to ensure fair treatment of borrowers experiencing difficulties. We also have a vulnerable customer team on hand to support customers as we recognise borrowers’ circumstances can change throughout the lifetime of their mortgage.
We appreciate that you trusted your client with us for their mortgage and I hope that you feel that you can continue to keep that customer with us.