The Future of Remortgaging by chenmeixiu


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The Future of Remortgaging

Description:    Remortgaging activity in the UK has fallen significantly. This is a result of the low base rate
                encouraging borrowers to revert to lenders standard variable rates rather than remortgaging. This
                brief looks at past activity in the market before forecasting how remortgaging activity is likely to
                perform over the next few years.


                - Uses proprietary Retail Banking Consumer Survey to investigate market trends.

                - Looks at how the main players are reacting to current developments in the market.

                - Provides a forecast for the remortgaging market over the period 2009-2013.

                Highlights of this title

                Remortgage gross advances plunged by almost two thirds from £34,200m in Q3 2007 to £11,800m
                in Q2 2009, while the overall market declined from £98,600m to £33,900m during the same period,
                largely driven by the decline in house purchases.

                The fallout from the credit crunch saw lenders retreating from heavy competition or pulling out of
                the market completely. However, in the remortgage market the large lenders have remained. The
                market is dominated by big players with Lloyds Banking Group, Santander, Barclays, Nationwide,
                HSBC and RBS controlling about 90% of the market.

                When their special deals end, borrowers are more willing to stay on the lenders SVR as many of
                them are now below the rates offered for those choosing to remortgage. They are no longer
                perceived as an uncompetitive rate for borrowers who have not managed to organize a remortgage
                but are among the best rates out there.

                Key reasons to purchase this title

                - Gain an insight into what your competitors are doing to deal with the slump in the remortgaging

                - Increase your understanding of your consumers behaviour.

                - Use The market forecast to plan your future strategy with confidence.

Contents:       CATALYST

                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
                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
The SVR has reached a point where it has become favorable for consumers to stay put
The average tracker rate is the most competitive rate but SVRs continue to fall
There has been some recent movement back onto fixed-rate deals
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
The majority of consumers do not intend to remortgage over the next six months
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
A rising base rate will see borrowers rushing onto fixed deals
There is unlikely to be a movement away from remortgaging products in the future

Supplementary data
Title insurance
Forecasting methodology
Further reading
Ask the analyst

List of Tables
Table 1: Datamonitor forecast of remortgaging and the total mortgage market, 2007-13f
Table 2: Annual gross advances for house purchase and remortgaging, 2000-08
Table 3: Quarterly gross advances split by type, Q1 2005-Q2 2009
Table 4: Buy-to-let quarterly gross advances, Q3 2006-Q2 2009
Table 5: Remortgaging activity by brand of lender
Table 6: Average monthly rate for different types of mortgage product, January 2007-June 2009
Table 7: Number of different types of loan advanced on a monthly basis, January 2007-June 2009
Table 8: Action that best describes situation over the last 12 months
Table 9: The impact of the time when the mortgage was arranged on the type of mortgage activity
Table 10: Likelihood of remortgaging over the next six months

List of Figures
Figure 1: Remortgaging gross advances saw a moderate fall between 2007 and 2008
Figure 2: The overall market peaked in Q3 2007 before falling away, remortgaging fell quickly from
Q3 2008
Figure 3: Buy-to-let remortgage gross advances fell by 87% between Q3 2007 and Q2 2009
Figure 4: Barclays/Woolwich has been the most successful at attracting new remortgage business
Figure 5: The average standard variable rate has been lower than the average fixed rate since
November 2008
Figure 6: The majority of borrowers are still taking out fixed-rate loans
Figure 7: Remortgage calculators facilitate the complex calculations involved in remortgaging
Figure 8: Woolwich outlines the differences between a normal mortgage and an offset one
Figure 9: Over the last 12 months more borrowers remortgaged than reverted onto their lenders
            Figure 10: The share of remortgaging as a percentage of new mortgage activity has fallen in the
            last six months
            Figure 11: Less than one fifth of respondents are likely to remortgage during the next six months
            Figure 12: The total mortgage market will recover sooner than the remortgaging market

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