Opportunities abound in the market

Bob Hunt

Bob Hunt

22 April 2021
Trends in last year's mortgage data may cause advisers to recalibrate their approach, particularly to remortgage business.
The latest Household Finance Review data from UK Finance, published in March, makes for interesting reading, not least because — even accounting for an abnormal year like 2020 — it appears to show some clear trends that may cause advisers to recalibrate their approach to remortgage business in particular.
First, the headlines, so to speak. We now know that gross mortgage lending was just over £243bn last year, understandably down from close to £268bn in 2019.
Purchase activity proved relatively robust, particularly once the stamp duty holiday was announced; indeed, the purchase completion figures for the fourth quarter of 2020 were the highest since those of Q4 2007, and December 2020 was up 30 per cent on the same month in 2019.
That said, overall, first-time buyer purchase loans were down by 13.7 per cent, homemovers down by 10.2 per cent and buy-to-let purchase loans down by 10.8 per cent.
There may also be a lot of interest in the remortgage/product transfer sector because, although both residential remortgage and BTL remortgage loan numbers were down by 21.2 per cent and 13.4 per cent respectively, PT numbers were off by only 2.6 per cent.
Strong performance
In other words, 2020 was still an exceptionally strong year for PT business, although it has been pointed out that, for those borrowers who were in the midst of mortgage payment deferral, their only option was a PT, given they were not allowed to remortgage.
That said, 2020's PT numbers were very close to those of 2019 — £1.2m, which means more than £168bn of PT business was written. The good news within this is that intermediaries are still taking a majority of that business. But it won't need me to tell you that many lenders don't pay a full procuration fee — you'll know the ones that do — and an ever-rising amount of PT business may well begin to bite in terms of income.
I am fully aware that advisers may think PTs have been done to death as a topic of discussion, and there is clearly a large number of clients for whom a PT is without doubt the most suitable option.
And few believe we'll see a drop in PT business. UK Finance estimates it will be up at £181bn in 2021, and advisers will want to secure as much of that business as possible. Every one of those opportunities presents the chance to create a borrower habit of renewing via an adviser, and in the typical life of a mortgage that could mean multiple mortgage transactions that add real value to the business.
Plus, interestingly, while the number of pound-for-pound remortgages has fallen away — undoubtedly also to do with the rise of PTs — remortgages with equity withdrawal grew in the second half of 2020, with many borrowers using the money for home improvements.
However, given the procuration fee policy many lenders have for PTs, and of course all the usual arguments — about the number of execution-only PTs also rising, the potential to lose clients, the greater use of tech targeting existing borrowers direct, etcetera — it's always worth advisers and firms considering their activity in this space and making sure that a PT is genuinely the right call for the client. It shouldn't be a line of least resistance, and an external remortgage in an ultra-competitive market may be a more appropriate option.

Reading this blog counts towards your CPD!

Click here to add this session to your Paradigm CPD log.

20 December 2021

The public gets what the Public wants’ - or do they?

10 December 2021

Consultation Paper CP 21/36 “A new Consumer Duty”

7 December 2021

FCA’s Consumer Duty seems like a costly exercise for advisers

2 December 2021

Cyber crime update and reporting requirements

9 November 2021

Who will buy...?

1 November 2021

FCA: Remote working expectations for firms

18 October 2021

Remortgaging: Timing may not even matter this time

8 October 2021

Make stamp duty work for everyone

4 October 2021

Time to talk

1 October 2021

The FCA’s plans to tackle investment harm

27 September 2021

Lack of housing stock means brokers need to work client banks harder

3 September 2021

Let technology do the work in the fast-paced mortgage environment

2 September 2021

Time of new beginnings

18 August 2021

The proof of the pudding

12 August 2021

FCA pension transfer advice: don’t be confused by the label

12 August 2021

Time for a change?

26 July 2021

The engagement conundrum

26 July 2021

"I can’t do it all"

7 July 2021

Paused for breath

6 July 2021

SMCR part two - conduct questions

28 June 2021

Introducing a new us!

17 June 2021

Patches - what are they and why are they so important

17 June 2021

Multi-factor authentication - the simple solution

8 June 2021

SMCR part one - time to take stock

27 May 2021

A reminder of the 'good old bad old' days of protection tech

18 May 2021

Let's not consider any 'reduction' in these as some sort of victory

5 May 2021

Simple methods-calculating client profitability

30 April 2021

If the pandemic has been the mother of invention, it's time to carry on

22 April 2021

Opportunities abound in the market

19 April 2021

Early Movers are Shaping the 95% LTV Market

13 April 2021

Here's a conundrum

8 April 2021

Advice processes for vulnerable clients

29 March 2021

Vulnerable signs for advice firms to watch out for

5 March 2021

Lenders have not got to grips with how the pandemic impacted borrowers

2 March 2021

How Covid has changed our financial lives

2 March 2021

Supply needs to match demand

19 February 2021

Don't overlook product transfers

16 February 2021

Creating a plan for good CPD

5 February 2021

Stamp duty debate a black hole

2 February 2021

Industry wide levy is a head scratcher

29 January 2021

Long-term imposter product may finally become relevant as a high LTV option

27 January 2021

How to deal with a subject access request



APCC Member
Paradigm Consulting is a Member of the Association of Professional Compliance Consultants

Paradigm Consulting is a trading name of Paradigm Partners Ltd
Office address: Paradigm Partners Ltd, Paradigm House, Brooke Court, Wilmslow, Cheshire, SK9 3ND
Paradigm Partners Ltd is registered in England and Wales. No.09902499. Registered Office: As above

Paradigm Mortgage Services LLP
Office address: Wellington House, Starley Way, Birmingham International Park, Solihull, B37 7HB
Registered in England and Wales. Company No: OC323403. Registered Office: Paradigm House, Brooke Court, Lower Meadow Road, Wilmslow, SK9 3ND
Paradigm Mortgage Services LLP is a Limited Liability Partnership.

Paradigm Protect is a trading name of Paradigm Mortgage Services LLP
Office address: Wellington House, Starley Way, Birmingham International Park, Solihull, B37 7HB
Paradigm Mortgage Services LLP is registered in England and Wales. Company No: OC323403. Registered Office: Paradigm House, Brooke Court, Lower Meadow Road, Wilmslow, SK9 3ND
Paradigm Mortgage Services LLP is a Limited Liability Partnership.