Debt restructuring activity next year should boost business levels, according to a new survey of intermediaries.
Research by Paragon Bank found that in the residential and rental sectors, brokers felt mortgages would be more important to their business than new purchase loans.
The latest Mortgage Brokers report found that 74% of brokers expect residential mortgage activity to be the main driver of business over the next 12 months, followed by rental mortgages (56%).
In contrast, only 44% said they expected buy-to-let to drive future business growth, 43% said first-time buyers and 33% expected business levels to be driven by moving new mortgages.
Advisors also expect growth in other areas, such as B. later-life borrowing (33%) and equity release (21%), the study showed.
Paragon noted that debt restructuring has featured heavily in the buy-to-let market this year, as changes to mortgage insurance regulations helped spur growth in five-year fixed-rate mortgages for five years.
More than four in 10 (41%) agents say they pay more attention to customer communication at the end of the mortgage term, with agents proactively engaging with borrowers on average 4.5 months before the end of the product term.
Another 10 in 10 (11%) companies say they have streamlined their compliance process, while more than 1 in 10 (6%) have appointed dedicated advisors to handle mortgage transactions.
Brokers also provided insights into client behavior related to debt restructuring, with brokers estimating that more than half (52%) of borrowers would switch to a new lender when the product matures.
When asked what they think is their client’s top priority when deciding to refinance, an overwhelming majority (91%) of brokers cited the product rate as the most important factor. However, 63% said product cost was important and 45% said ease of doing business was also a factor.
Richard Rowntree, Managing Director of Paragon Mortgage, said: “In 2017, the introduction of new underwriting standards made five-year fixed-rate mortgages more popular with borrowers. With many of these loans now coming due, the increase in debt restructuring is something we expected and planned.
“It is interesting to share our experiences with our brokerage partners, many of whom are taking action to accommodate this shift in business mix.
“While interest rates and fees are undoubtedly the most important factors in a borrower’s decision to refinance, we also see that non-cost aspects such as simplicity, speed and service are also prioritized. This underscores the importance of improving a client’s term and debt conversion experience. benefits for the industry.”
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