Ready, Set… Remortgage: Preparing for the Mortgage Reset

Mortgage advisers across the UK have a crucial role in helping homeowners navigate a significant financial transition. Approximately 500,000 homeowners will see their fixed-rate mortgages expire in the second half of 2024, presenting challenges and opportunities for borrowers and advisers alike. 

Additionally, 360 Lifecycle’s data shows a 25% increase in remortgage business and a 41% rise in product transfers in Q1 2024 compared to the last quarter. This suggests ample chances for mortgage advisers to revisit client discussions on previously unselected products and services.

The Mortgage Expiration Surge 

This year will see the expiration of many two-year fixed-rate deals from 2022 and five-year deals from 2019, periods when interest rates were notably low, often below 2%. In contrast, current mortgage rates average 4.5-6% due to Bank of England rate hikes aimed at controlling inflation. 

Implications for Homeowners 

The transition from historically low rates to the current higher rates means many borrowers will face significantly increased monthly payments. For instance, a homeowner with a £200,000 mortgage might see their payments rise from £824 to £1,144 per month if their interest rate jumps from 2% to 4.6%. This scenario can strain household finances, making the role of mortgage advisers more critical than ever. 

Strategies for Mortgage Advisers 

1. Provide Proactive Advice: Now is the time to reach out to clients whose fixed-rate deals are ending. Offer to review their financial situations and discuss options for refinancing, including fixed versus variable rates, and the potential benefits of extending their mortgage terms.
   
   
2. Educate Clients on LTV Ratios: Clients who have significantly paid down their mortgages might be eligible for better rates due to lower loan-to-value (LTV) ratios, ensure clients are aware of this potential advantage.

    

3. Adjust Budget Planning: Advise clients to prepare for higher monthly payments by adjusting their household budgets. Proactive financial planning can help mitigate the impact of increased mortgage costs. 

 Leveraging Technology with 360 Lifecycle 

For mortgage advisers, leveraging technology is essential to manage these market changes effectively. 360 Lifecycle offers a comprehensive CRM solution designed to enhance client support and streamline the mortgage process. Here’s how advisers can utilise 360 Lifecycle’s features in the current market conditions: 

1. Client Review Tracking and Milestone Management: 360 Lifecycle allows advisers to keep detailed records of client interactions, mortgage terms, and key rate expiry dates. Advisers can proactively contact clients as their fixed-rate periods come to an end, providing timely advice and support.

    

2. Automated Communications: With 360 Lifecycle, advisers can automate email and SMS reminders, keeping clients informed ahead of their mortgage renewal dates. This consistent engagement builds trust and shows clients their needs are always being met.

    

3. Reporting and Data-Driven Insights: 360 Lifecycle provides analytics and reporting tools helping advisers identify trends and opportunities within their client base. For instance, advisers can identify which clients could benefit from refinancing based on their current loan-to-value ratios and remaining mortgage terms.

    

4. Campaign Manager: Using detailed client profiles and financial data stored in 360 Lifecycle, advisers can build and create personalised campaigns tailored to each client’s circumstances. These campaigns can address fixed versus variable rates, potential savings from refinancing, and strategies for managing increased monthly payments.

    

5. Integrations with the Best Tools: 360 Lifecycle integrates with Mortgage Brain and Twenty7Tec for Mortgage sourcing. They offer market leading criteria and affordability tools, providing advisers with real-time market information and access to the best mortgage products and rates available, ensuring clients receive the best available options and rates. 

As we navigate through this crucial year in the mortgage market, the expertise and proactive support of mortgage advisers will be invaluable to homeowners facing higher rates. By staying informed and leveraging advanced CRM tools like 360 Lifecycle, advisers can help clients manage the challenges and seize the opportunities presented by the evolving economic environment.

For detailed advice and personalised financial planning, encourage your clients to reach out for a consultation.