Homeowners have increasingly reassessed their mortgage options due to recent interest rate activity, according to new data from Legal & General’s SmartrFit affordability tool.
Searches on the SmartrFit platform made on behalf of borrowers looking to remortgage after less than six months increased by 31% from April to May 2023.
The increase in searches around remortgaging suggested that borrowers were willing to pay early repayment charges (ERCs) in order to lock in more favourable rates.
Additionally, Legal & General’s data indicated that buyers were relying on the ‘Bank of Mum and Dad’ for gifting and financial support, shown by increases of 44% in searches for Joint Borrower Sole Proprietor (JBSP) mortgages, and 33% in searches for borrowers using gifted equity.
This conclusion was further supported by the steep 53% jump in retirement interest-only (RIO) searches, which points to retired borrowers taking out loans to support family through gifting.
Activity from overseas buyers continued to rise, as ‘Visa’ remained the most popular criteria used, holding the top spot for eight months running.
May also saw surges of 30% in searches from expats not based in the UK, and 13% for searches on behalf of those with a deposit from a foreign source.
In addition to growing demand for environmentally friendly mortgages, the data also pointed to resilience within the buy-to-let (BTL) sector.
May saw an increase of 66% for searches on ‘onward loan to value’ products from buyers with a let-to-buy mortgage, and 18% from limited companies with BTL mortgages.
This could indicate that some buyers were still eager to proceed with purchase plans, but unable to secure their desired price, potentially due to a slowdown in the market.
Searches for the terms ‘holiday let’ and ‘AirBnB’ increased by 19% in May.
Jodie White, head of mortgage products and transformation at Legal & General Technology, said: “As people look to reevaluate their finances in response to ongoing cost-of-living pressures, and with an estimated 1.8m fixed-rate deals due to end this year according to UK Finance, the remortgaging boom comes as no surprise.
“The resilience of the housing market, as demonstrated by persistent overseas activity and interest within the buy-to-let sector, is also a reassuring reminder that despite the headwinds facing the mortgage market and consumers in general, there is little evidence to suggest any need to panic.”
She added: “When supporting borrowers during this time, particularly those that are vulnerable or struggling to keep up with payments, it is crucial that brokers implement new technologies to help manage the current demand for financial guidance.
“By integrating tools such as CRM software and open data platforms into their advice process, brokers can reduce the time spent on manual tasks, and free up resource to focus on fostering good customer outcomes through high quality advice.”
