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Mortgage View: Don’t miss the swap boat

When the base rate and swap rates are not moving, life can get pretty dull for your average broker. Lack of movement in rates usually results in a lack of movement among clients. They sit tight as there is nothing to focus them on remortgaging or buying their first home if they have not yet stepped on the housing ladder.

But rising or falling rates – it does not matter which – are good for business or at least good for clued-up brokers who should be on the ball. Once swaps start to move, it is time to alert clients who are coming to the end of fixed, discounted or base-rate tracker offers who should be thinking about remortgaging.

The recent flurry in excitement as lenders rushed to withdraw their tasty fixed-rate deals is a case in point. Swaps rose significantly in the days leading up to this so all the signs were there for anyone bothered to look for them. Fixed rates, particularly over two and five years, were just too good to hang around for long, which is exactly what happened.

Savvy brokers should have been straight on the phones to their clients rather than having to settle for a less attractive rate once all the best ones had been withdrawn.

With fixed rates settling at 0.1 or 0.2 per cent higher, it is not the end of the world for clients who missed the boat. But with figures released recently showing that repossessions and bankruptcies are on the rise – as consumers’ overall debt increases – it could be a case that every little helps.

The Government seems keen to discourage regular switching, calling for borrowers to take out long-term fixed-rate deals of 10 years or more. Ministers point to the example of the US and rest of Europe, where longer-term fixes are commonplace but the UK is a a more mature, sophistic-ated market, with borrowers used to remortgaging and finding the best deals.

Of course, longer-term fixes are not great news for brokers. But anyone who is concerned about the future of remort-gaging should perhaps be looking closer to home at the subsidiary services they offer. Mortgages should be the first point of contact between client and broker but what about associated insurances, some pension planning and wealth management and other properties – buy to let, international, even commercial funding?

It is vital to grab all the remortgaging business you can and to recognise the opportunities as they present themselves. But relying on remortgaging business is foolhardy and ultimately not likely to be enough. These are challenging times for brokers and the successful ones will be those who can adapt accordingly.

Mark Harris is managing director of Savills Private Finance

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