For any potential borrower, large or small, a multitude of influencing factors could sway the decision-making process. From newspaper headlines and advertisements, through to the research they undertake and the advice they receive or, as importantly, do not receive.
In an age of communication it is safe to say that, despite super-injunctions and the like, not much remains under the radar, especially when it comes to something that affects people directly in the pocket.
Five years ago if you had asked the man on the street what SVR meant, no doubt the vast majority would have been unaware, whereas considerably more people will be aware nowadays.
Much of this awareness is thanks to the large number of homeowners that stayed on their lenders’ SVRs at the end of their mortgage terms, either through choice or necessity, and in many cases saw a marked reduction in monthly repayments.
Breaking this customer inertia and getting clients to remortgage became a tougher sell as a result, despite increasingly competitive deals returning to the marketplace.
In recent weeks it has been difficult to ignore the amount of mainstream media coverage generated by recent Halifax, NatWest, RBS, Yorkshire and Clydesdale SVR moves, which has brought it to the attention of even more borrowers.
In truth, many people have been shocked by these hikes as I suspect an association between SVRs and interest rates existed for a good proportion of these home-owners. And with interest rates so low for so long, many also expected their lender’s SVR to continue to reflect this.
Recent moves have served warning on those borrowers and have provided a platform from which intermediaries can attack this inertia and really maximise the available remortgaging opportunities. And there is not only the estimated million-plus affected SVR fence-sitters to target, as other SVR borrowers not with the aforementioned lenders have also been made to sit up and take notice.
As such, it is those intermediaries that identify and contact clients, both directly and indirectly affected by any SVR changes, who are in a prime position to boost remortgage business volumes and subsequently enhance client retention and referral rates.
There are still a number of deals that will genuinely benefit those homeowners with decent levels of equity and good credit ratings. We cannot ignore the fact that funding, attitudes to risk and lending criteria in general continue to impose some constraints on homeowners but access may well be more straightforward than many think.
Since its launch in the fourth quarter of 2010 the Barclays Great Escape range has assisted more than 35,000 customers and we estimate that, on average, these customers will save in excess of £1,200 over a two-year period.
Intermediary advice has been integral in this and it is not only the benefits attached to saving a few pounds from the monthly repayments. Some lenders out there, Barclays included, offer peace of mind that the follow-on rate is a base rate tracker rather than the lender-determined SVR rate, which many clients have now become wary of.
Lenders are currently contacting clients about SVR changes and the people receiving these need to be aware of their options if they are not already. This is where good communication and timing will play a big part in educating clients on the potential benefits of refinancing to not only reduce mortgage repayments but also help secure their future.
There may not be a mass upward revision of SVRs from lenders across the board but the element of doubt has certainly been introduced, which will make increasing numbers of homeowners question their mortgage status. Fortunately, it is the intermediary market that remains best able to answer these questions.