The UK remortgage market is expected to see a significant increase in activity this year as more borrowers opt to switch lenders rather than remain with their current provider, according to brokers surveyed by mortgage network PRIMIS.

A survey conducted by PRIMIS found that two in five mortgage advisers are already witnessing a rise in customers moving to a new lender at the end of their fixed-rate deals. Additionally, 93% of brokers expect remortgage volumes to increase further in 2025 as competition in the market intensifies.

IMPACT OF INTEREST RATE CUTS

The shift in borrower behaviour follows the Bank of England’s recent decision to lower the base rate from 4.75% to 4.5%, triggering a wave of rate reductions from lenders.

Craig Hall, director of strategic partnerships at PRIMIS, said the rate cut had intensified competition among lenders, leading to better deals for borrowers.

“Switching to a new lender could be a better solution than sticking with their existing lender,” Hall said, highlighting the growing appeal of remortgaging over product transfers.

CHANGING TRENDS IN REMORTGAGING

For several years, product transfers have been the preferred choice for most borrowers when refinancing, allowing them to secure a new deal with their existing lender without a full affordability assessment. According to UK Finance, 84% of remortgagors in the second quarter of 2023 remained with their current lender rather than switching.

However, as two-year fixed terms mature, PRIMIS data indicates that 38% of brokers are seeing an increase in customers opting to move lenders, having adjusted to higher monthly repayments. Borrowers exiting five-year fixed-rate deals, meanwhile, are still likely to experience a significant rise in their repayments.

NEED FOR FLEXIBLE OPTIONS

Hall noted that while product transfers offer a straightforward way to secure a new deal, they often come with restrictions. “Many lenders don’t allow for any change in term or switching to part-and-part or interest-only temporarily,” he said. For some borrowers facing steep repayment increases, extending their mortgage term could be necessary to manage costs.

He also emphasised the importance of seeking independent advice to ensure mortgage and protection arrangements remain suitable, adding that this increased need for guidance is another factor driving the expected recovery in remortgage activity in the months ahead.