Foundation Updates
Why 2025 Could Be the Year of the Remortgage
The mortgage market has seen significant shifts recently, with remortgage activity taking a backseat to product transfers (PTs).
According to IMLA figures, remortgage lending fell from £82.73bn in 2023 to £78bn in 2024, while PT lending, though also declining, remained about three times larger.
This marks a substantial change from 2022, when remortgage lending peaked at over £107bn. However, the outlook for remortgaging is improving. IMLA forecasts growth to £88bn in 2025 and £94bn in 2026.Meanwhile, the PT business is expected to rebound to its 2023 level in 2025 and reach £260bn in 2026. The changing interest rate environment is likely to impact affordability positively.
Many borrowers who previously couldn't meet the criteria for remortgaging with a different lender may now have more options. As rates are anticipated to fall throughout 2025, it could solve affordability issues for a broader range of borrowers, including those currently on higher rates from recent years.
Advisers should prepare for growth in existing borrower business, as more customers may be able to secure suitable deals through different lenders. Early 2025 has already seen lenders offering more attractive remortgage options, including fee-assisted legal services on special edition fixed-rate products.The remortgage market is poised to become more competitive over the next couple of years, especially if rate cuts materialize more frequently.
Options beyond just price, such as criteria and add-ons like fee-assisted legal services, will be crucial in making a significant difference to household finances. While the remortgage sector has been subdued recently, the ground feels firmer entering 2025.
Advisers are likely to be in higher demand this year to navigate this area. Both advisers and lenders should focus on this opportunity to ensure refinancing borrowers have access to all available options.
