Spring is in the air, but many people are still suffering the winter blues when it comes to their finances.
Some are still paying off their Christmas spending or reeling from the impact of a January tax bill. Inflation may have fallen, but we’re all feeling the pinch of higher prices, with the elevated cost of living now firmly baked into the system.
Sadly, there is no monetary thaw in sight, with higher national insurance coming into effect on 1st April, energy prices set to rise and another ‘Fiscal Event’ on 26th March which could mean even higher taxes for some.
Given the economic environment, it’s no surprise that, as a nation, we have been taking on more unsecured debt.
Unsecured borrowing began to increase in earnest as interest rates took off in January 2022.
The annual growth rate in credit card spending alone hit 13.5% by January 2023, rising a further 12.6% in the following year and up another 8.5% in the year to January 2025.
The average credit card debt per household was £2,534 in October 2024, and overall unsecured debt (including personal loans and car finance) per UK adult was £4,308.
We do not carry this debt lightly – research carried out by the Money and Pension Service reveals that 39 of UK adults worry about credit card debt.
So far, so gloomy. But there is brighter news for homeowners: 2025 could be the perfect time to consolidate credit card and other personal debt, by rolling it all into one mortgage secured against their home and paying a far lower interest rate than the current average credit card APR of 24.3% or personal loan APR of 11.24%.
As every broker knows, this is set to be a record year for refinancing, with 1.8 million mortgage borrowers rolling off their 2- and 5-year fixed rates.
That compares to 1.6 million who came to the end of a fix in 2024 and 1.4 million in 2023.
Over a quarter of borrowers with fixed deals coming up for renewal in 2025 have 2-year products taken out when rates were higher than they are now.
The rest will be coming off 5-year deals, many of which are likely to be priced lower than 2025 rates.
Many will have seen the value of their properties increase since they took out their last mortgage, and are sitting on more equity than before – significantly more, for the cohort coming out of 5-year arrangements.
Most will have experienced other changes to their circumstances and finances since they last arranged their mortgage, for better or worse.
More of these borrowers are likely to opt for a fully-advised remortgage this year than the product transfers (PTs) which dominated the market in 2023 and, to a lesser degree, in 2024.
PTs prevailed when mortgage rates were high and affordability calculations challenging.
As rates have started falling and the affordability picture improves, a PT is no longer the default option for those maturing off a particular deal.
That is good news for brokers, who have greater opportunity to use their skills and knowledge to carry out a proper financial MOT for their clients and find the most appropriate solutions for their current situation, which may include consolidating unsecured debt as part of the remortgage.
However, some brokers may have become accustomed to the PT model, which tends to be far quicker than a remortgage.
Others may be dealing with an increased caseload as the market picks up.
Both groups may struggle to find sufficient time to meet the new demand for full remortgaging, particularly when it comes to more complex cases, or those involving several elements, such as debt consolidation.
That’s where a ‘broker’s broker’ like Crystal and others can help to ensure your clients get the service – and the solution – they deserve, and that we as a broker community are duty bound to provide.
We can simply help you find the best provider and the best deal, or you can refer the whole case over, without losing your relationship with your client.
As the pendulum swings away from PTs and back towards remortgaging, more opportunities are opening up for brokers to demonstrate their expertise in securing the best possible outcome for their clients – whether that means working alone, in tandem with a trusted broker partner or via referral to an expert.
Debt consolidation may be a relatively small part of the solution for a client, but it is an element that should not be overlooked during a financial ‘spring clean.’
Jo Breeden is managing director, Crystal Specialist Finance
