The Intermediary – September 2025 - Flipbook - Page 94
T E C H N O L O GY
Opinion
Couldn’t have put
er a quieter couple
of months over the
summer, we are now
well into September
and the usual
Autumn bounce in
activity. As 2024 drew to a close, UK
Finance issued its annual forecasts,
anticipating that remortgaging is
expected to grow by 30% to £76bn
this year.
In August, the trade association
published commentary affirming
that high refinancing volumes have
indeed dominated the market over the
first half of the year. It cited figures
from Legal & General that highlighted
the trend, showing that in Q1 2025
broker searches for remortgage
products jumped by 34% compared
with Q4 2024.
UK Finance noted the changes to
Stamp Duty in April, lowering the
threshold for tax to kick in for those
purchasing a home who are not firsttime buyers back down from £250,000
to £125,000. September is likely to
show a further swell, with this month
the second major peak in remortgage
as customers’ fixed rate deals end.
It is not just the volume of people
coming off fixed rates that is boosting
refinance this year. Five rate cuts from
the Bank of England since July 2024
mean the deals available today offer
borrowers a very welcome reduction
in their monthly payments. The
much higher cost of living has been
noticeable for the majority of middle
Britain, households with children to
feed and school. A few extra hundred
pounds off their mortgage each month
will make a big difference to many.
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The Intermediary | September 2025
The numbers are significant.
UK Finance estimates 1.8 million
borrowers’ fixed rate deals will mature
in 2025 alone, up from 1.6 million last
year. Compare the Market carried out
analysis that suggests roughly 940,000
of these homeowners will be coming
off 2-year fixes in 2025.
UK Finance is expecting even higher
refinance volumes next year, with 1.9
million fixed rates maturing in 2026.
Product transfers
For brokers, the opportunity to take
advantage of this is self-evident; for
lenders, it is just as important an
opportunity.
Customer retention strategies have
characterised the UK mortgage market
over the past five or so years, with a
significant increase in the number
of product transfers driven by rising
interest rates. With rates now lower
again, borrowers have more flexibility
on affordability and more choice when
it comes to switching lender for the
best rate available.
The price war that has ensued is
especially fierce at the lower loan-tovalue (LTV) end of the market, and is
dominated by the big six high street
lenders vying for market share.
The next tier of lenders, mainly
the mid-sized building societies, have
higher cost of funds than the big banks
with access to capital markets. The
improved affordability environment
therefore poses a different sort of risk
to their lending volumes. Retention is
HAMZA BEHZAD
is business development
director at finova
absolutely key for these lenders, who
must maintain balance sheet size as
well as credit quality.
Across the market as a whole, UK
Finance figures show that product
transfers have seen a decline already
this year. The easing of affordability
checks on like-for-like remortgaging
or where a new deal is cheaper than
the existing one, brought in by the
Financial Conduct Authority (FCA)
earlier this year, will further support
borrowers looking to move lender.
Without the lure of ultra-keen
pricing to compete with, mid-sized
lenders must offer their existing
customers another reason to stay.
