Remortgaging as BoE announces it expects 40% of borrowers to be paying more in the next year

We're not having a hard time placing clients with new leaders because the stress tests used prior to their first mortgage have meant most borrowers fit current lending affordability rules. As an aside, perhaps it was a reason to have kept the stress test rather than removed it. The problem facing borrowers is that because of a decade of artificially low rates, people have become accustomed to remortgaging and seeing their payments and interest rates reduce; those days are over. It's a shock to their systems simultaneously as everything else is rising in price. It's particularly jarring for those previously new borrowers about to come to the end of their very first fixed-rate product, whether that was for 2 or 5 years. Many first-time buyers took mortgages with either a 5% or 10% deposit, thinking when their first deal was up, they'd be quids in as their next rate would be lower. Instead, they will find that they're all on the up, and the mortgage payment will rise in many cases. Many people forget that we operate in a mortgage and property market. Markets rise and fall; they can treat you well and quickly turn against you. However, many consumers think it's unfair as they often expect things to always go in their favour, even though there is always a risk from the outset. It's a peculiar symptom that many people consistently overestimate the upside at the same time as dismissing potential downsides. This is one wake-up call many do not want to face.

I am finding clients who are keeping an eye on everything going on in the world are aware they are likely to be paying more when the current fix deal comes to an end as the previous decade of low rates has well and truly come to an end and now more than ever important to seek advice as I am personally finding some clients who circumstances have changed with one partner no longer working unable to move to another lender due to affordability so they only viable option is to then stay with their current lender and take a product transfer.

At the moment many people are getting an unpleasant surprise when they come off their 1.24% fixed rate from a few years ago and get told the very best deal now starts with a 3. I've not yet found this is a problem getting them a new deal, the lenders are quite sanguine with the situation, but clients are the ones in a bit of a panic at the extra few hundred quid they have to pay towards the mortgage. Of course, there are a few things that could potentially be looked at to help, such as extending the term of a repayment mortgage, to help manage that cost increase, but this is best looked at by a professional motgage broker on a case-by-case basis, there is not a one-size-fits-all fix.

We're having no issues placing clients but rates are increasing rapidly and even waiting a week or 2 can cost clients thousands of pounds in extra interest. Customers need to be talking to brokers as early as possible to try to secure rates. My simple advice to anyone that us worried? You should pick up the phone to a broker today.