Borrowers are expected to opt for remortgages this year, following years of the market being dominated by product transfers, mortgage advisers told a network.
A poll carried out by Primis found that two-fifths of advisers said they were already seeing a “noticeable increase” in borrowers switching to another lender when their fixed rate term ended.
A further 93% said they predicted higher remortgage volumes this year.
Craig Hall, director of strategic partnerships at Primis, said: “We’ve just seen the Bank of England slash the base rate from 4.75% to 4.5% at its first Monetary Policy Committee meeting of the year.
“That’s driving a real bump in competition, with most lenders rushing to cut their own rates off the back of it.
“Switching to a new lender could be a better solution than sticking with their existing lender.”
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Data published by UK Finance showed that in the second quarter of 2023, 84% of borrowers refinancing chose to stay with their lender. In the trade association’s prediction for this year, it said there would be more remortgaging to another lender as a higher number of fixed rates expire.
Primis said as two-year terms mature, 38% of the brokers polled said borrowers were choosing to change to a new lender now they had adjusted to higher monthly repayments.
However, those on five-year fixes were more likely to see a significant rise in costs.
Hall added: “While product transfers do mean it’s possible to switch to a new deal without a full underwrite, many lenders don’t allow for any change in term or switching to part and part or interest-only temporarily.
“For many borrowers facing a big step-up in repayments, that could mean extending their term to absorb those higher costs.
“This highlights the reason for customers to seek independent advice to review both their mortgage and protection needs remain adequate and is another reason remortgage volumes are going to stage a real recovery over the coming months.”
