he mortgage market as lenders who have taken advantage of the scheme are forced to demonstrate increased loan availability for consumers.
Andy Knee, chief executive of LMS, said: “It will be a long time before remortgage activity reaches anywhere near its 2003 peak having been hit by reduced mortgage availability, lower lender SVRs as well as a rise in the number of lifetime mortgages.
“However, the FLS can already be credited with generating some excellent deals for homeowners looking for low LTV mortgages of less than 60% and we expect this to continue to boost activity well into next year. There is much less evidence of increased lender appetite for mortgages above this threshold.
Brokers will have a significant role to play in flagging up these new competitive deals to clients who may not otherwise take advantage of the savings available to them. We also hope that the sympathetic approach to mortgage prisoners advocated in the Mortgage Market Review transpires. If not the new governor of the Bank of England, Mark Carney, may find he has an even bigger role to play in helping those homeowners that find themselves hostage to fortune.”
With low LTV mortgages proving the most attractive to lenders, because of the lower demand that they make on precious capital, the remortgage market will be an obvious area for lenders to target and LMS expects to see more competitive deals for homeowners with healthy levels of equity. For this reason, the number of homeowners remortgaging could grow by as much as 25% from an estimated 310,000 transactions this year to almost 400,000 in 2013. However, this still represents less than a third of the 2003 peak of 1.5million.
An increase in the number of ‘mortgage prisoners’, however, will keep a lid on remortgage activity next year. To add to this, a significant proportion of homeowners are not aware of the savings they could make by remortgaging. Instead, many are content to stay with a current mortgage deal or remain on a lender’s SVR because they deem their monthly repayments to be affordable.
LMS says that an increase in the base rate would trigger a wave of remortgaging as in the past but with this considered unlikely next year only increases to lenders’ SVRs would have a similar effect.