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Zero product options for remortgagors

Journalist: Paloma Kubiak, YourMoney.com

ended 16. June 2023

Good morning,

Heard of one case where a broker - for the first time - was unable to find a product for a BTL client. Rental calcs not working, no product transfers available which means paying SVR of 9.46%.

Interested to hear from other brokers who may have experienced the same, either no options available or very limited compared to normal.

Interested in hearing on this from both the BTL but preferably resi market cases. 

Or if no experience of this, what are your thoughts on this, ie are we heading towards v limited options for remortgages in the next year as banks are increasingly cautious and a house price correction looms? 

Are there truly no options for some remortgagors? Is a new ‘mortgage prisoner’ scandal on the horizon? Should the gov intervene to help mortgage holders? Forecasts on arrears/repossessions etc. 

As always, any other relevant comments welcome. 

Thank you very much, Paloma Kubiak

5 responses from the Newspage community

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Editor
Jamie Elvin
Director at Strive Mortgages

In most residential mortgage cases, there are options to remortgage, either with the current lender or with a new one. The affordability and criteria for residential mortgages generally remain unchanged in most cases. However, the current issue lies in the high-interest rates rather than the lack of deals. Another potential issue may arise if house prices continue to fall, and customers have less than the minimum equity required to remortgage. In such cases, they may be forced to remain on the lender's standard variable rate. While we have yet to see this scenario, I suspect it is not far around the corner for some.

However, buy-to-let mortgages are a completely different situation. It can be very challenging to remortgage elsewhere due to the high-stress tests, especially for those with higher loan-to-value ratios (LTVs).
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Justin Moy
Managing Director at EHF Mortgages
Some buy-to-let lenders still don't have Product Transfer options, typically those who near 100% fund on the money markets and work within the specialist finance markets. This is a terrible situation, but I guess it won't be the only landlord who will suffer in the short term. There is an argument that a Bridging Loan may be cheaper at the moment. For the majority of BTL and residential borrowers, their current lender should be in a position to help with a Product Transfer product, most have a catch-all product should there be little or no equity in the property. For some, that option may be too expensive, and the SVR even more costly, so that could become the new 2023 version of a mortgage prisoner. Doomed if I do, doomed if I don't.
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Graham Cox
Director at Bridging Hub
I don't think the government should intervene by paying mortgage interest. As a country, we cannot afford to constantly bail out when things go wrong.

Instead I think lenders should be strongly encouraged to have forbearance for those unable to find an alternative deal. Perhaps in the form of a period of interest-only repayments, or even a payment holiday. Or by limiting the lender's SVR rate.

But it's all just a symptom of what a complete mess the housing market has become thanks to near-zero rates and property speculation causing prices to overheat.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
This is the sad reality of the current situation for many landlords due to review mortgages in the coming weeks and months; with rates as high as they are and reflected in the lender's stress tests options will be severely limited, with many only being able to do Product Transfers (PT's) with their existing lender - will we see lenders capitalise on this and make their PT offerings less competitive, knowing that people can't remortgage away? The only option landlords will be left with, especially if their lender doesn't allow PT's will be to sharply increase rents at their first opportunity.
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Rhys Schofield
Brand Director at Peak Mortgages and Protection
I can see this happening in some situations as not every lender offers product transfers and rental stress test rates are killing all but the best yielding buy to let applications straight out of the gate. Perhaps a sensible intervention from the regulator would be to force all lenders to offer a rate switch at no worse a deal than being offered to new customers.