As rate fall, borrowers face the dilemma of whether to remortgage or do a product transfer (PT) – an issue being described as the ‘topic of the year’ among brokers.
With the fall in rates, borrowers are facing a big decision about whether to remortgage or switch to a new product with their existing lender.
The rapid change in rates may have prompted many to jump ship to get the best deal.
Mortgage Solutions speaks to several brokers for their views on whether brokers are seeing a noticeable shift in people remortgaging versus PTs – and if some borrowers are still hesitant to remortgage.
The topic of the year
Dennigan Tyson, mortgage adviser at Pia Financial, said: “This has been the topic of the year within my remit, and in most cases, it has been quite mixed.
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“The six-month… product transfer window has shortened, with some banks and this has impacted consumers and the advice that I have given.
“I don’t think there is any hesitation from customers. It is more the capability of the adviser to constantly monitor the rates and ensure that clients don’t jump too soon and allow themselves as many options up to one month before.
“I have done it throughout the year and my clients have often benefitted hugely with interest rate reductions and monthly savings.”
Restricting new rates
Elliott Culley, director at Switch Mortgage Finance, agreed that some lenders have returned to an “old format” of only providing new rates for existing borrowers three months before their renewal date.
He said: “This has meant more remortgages away as some borrowers want to sort out the new rates more quickly.
“The majority of the time the rates offered to existing borrowers are not great, so remortgaging is, nine times out of 10, the best option.”
He explained that some borrowers were holding off on remortgaging due to rates dropping.
However, he added: “With rates starting to increase, some borrowers have naturally decided to try and sort out their plans more quickly.”
Product transfers
PTs still have their place, particularly for landlords, according to Kundan Bhaduri, a property developer at The Kushman Group.
He said: “As a landlord currently remortgaging several properties, I’m seeing first-hand why many investors are opting for product transfers over full remortgages.
“With rates dropping, product transfers offer a straightforward way to lock in a deal without the paperwork, costs, and time required for a complete remortgage.”
He continued: “It’s particularly appealing for portfolio owners who want to secure properties quickly while keeping costs in check.
“Yet, there’s still hesitation around remortgaging, especially among those worried about future rate changes.
“Locking in a new fixed term can feel risky, given potential shifts in the economy.
“Many of us are trying to balance immediate financial sense with long-term market uncertainty, which makes product transfers the more flexible choice for now.”
Dynamics of the market have changed
Meanwhile, Mark Harris, chief executive of mortgage brokers SPF Private Clients, said: “At the tail of 2022 and start of 2023, we saw and heard talk of mortgage rates as high as 6.5% alongside a raft of bank rate increases from the Bank of England.
“With rates increasing, much activity – including moving or capital raising to pay for work on the property – [was] mothballed as borrowers battened down the hatches and sat it out.
“Many of those who came to the end of their existing deal took the best rate on offer from their lender, rather than shop around as there wasn’t much competition when it came to pricing.
“In 2024, as borrowers’ expectations for falling mortgage rates became a reality, the dynamics of the market have changed.
“Pent-up activity has been released on the back of more affordable/palatable rates as lenders compete for business and customers, encouraging borrowers to shop around and plump for the best deals.”
