Remortgaging will dominate mortgage intermediary business in 2023, Paragon Bank research has revealed.
A survey of over 350 mortgage brokers found that 78% believe that remortgaging will be the strongest driver of business over the next 12 months, followed by buy-to-let remortgaging, cited by 51%.
A third of brokers claimed (33%) claimed that interest-only mortgages would be a strong contributor of business during the year as borrowers adjust to a higher interest rate environment, while later-life lending and adverse credit mortgages were highlighted by 29% and 28% of brokers respectively as drivers of business.
Richard Rowntree (pictured), Paragon Bank managing director of mortgages, said: “After strong sales markets since the introduction of the Stamp Duty holiday in 2020, brokers now believe the dial will shift and remortgaging will dominate business.
“In the owner-occupied market, many borrowers are due to come off two or five-year fixed-rates, whilst the buy-to-let market saw a significant amount of five-year business written in 2018 due to mature.
“We have helped our own customers to product switch by extending the period at which they can switch to six months before maturity, and we stand well-placed to support professional landlords more broadly who are coming to the end of their fixed-rate deals, particularly those that operate as limited companies, who have four or more properties in a portfolio or operate in HMOs.”
Furthermore, the Bank’s research revealed that intermediaries were less convinced about the sales market in 2023.
Less than a quarter (24%) believed home movers would be a significant contributor to business, falling to 23% for first-time buyers and 18% for buy-to-let purchases.
In terms of product popularity, brokers were split on whether borrowers would opt for the certainty of a fixed-rate mortgage or cheaper variable options.
Just under half (49%) believed that five-year fixed-rate mortgages would be the most popular product, with 47% stating Base Rate trackers or variable products with no early redemption charges would drive business.
Meanwhile, 44% suggested that borrowers would want a two-year fixed mortgage.
Rowntree added: “We believe that whilst buy-to-let house purchases will be slower next year than the previous two years, professional landlords will still be looking for acquisitions.
“A slower market means they are well-placed to pick up stock and we know many are keen to add to their portfolios.”
