Collins Dictionary's word of the year for 2022 is ‘permacrisis’. A fitting reflection of a tumultuous year. Within the first few weeks, UK inflation hit 5.4 per cent. By December, the Bank of England had raised interest rates eight times. As the year draws to a close, the pace of house prices is stalling, and purchasing is slowing down significantly. But remortgaging continues to be a necessity for many. With affordability remaining the overarching theme, what options are available to your over 50s borrowers? Hodge’s Emma Graham, James Enos and Andrea Roberts tell us how the remortgage market is changing as we end a roller-coaster of a year.
A recent Hodge cost of living survey echoed what we’re all seeing in the news, we are spending less. The financial crisis is making many of us reconsider spending on everyday items a lot more carefully. So, when it comes to the much bigger things, like life events, family celebrations or carrying out repairs on the roof above people’s heads, there’s real concern about how to pay for them.
At Hodge we’ve seen 61% of new business during 2022 being on a remortgage basis with our 50+ mortgage being the most popular choice for customers. Hodge research also found that nearly a fifth of people will be looking to release equity the next time they re-mortgage, and just under one-third (29%) said the increase in utility bills would affect their decision about remortgaging.
Andrea Roberts, national account manager north at Hodge said: “For most, rainy-day funds or holiday savings will take a backseat, as consumers are forced to readjust their outgoings and financial attitudes to accommodate the new cost of living.”
“However, we’re seeing new trends in reasons for borrowing,” James Enos, national account manager south at Hodge added. “With home improvements still a priority as many look to change their surroundings to suit their new normal, I think we can naturally expect to see a rise in debt consolidation as the cost of living crisis really hits, and people look for ways to better manage their money.”
Understandably, customers are choosing to leave their savings and investments where they are thanks to strong interest rates, which inevitably makes remortgaging and capital raising for weddings, university fees, gifting deposits and home improvements a more attractive option.
“What’s interesting,” Emma Graham, business development director for mortgages at Hodge said, “is the fact that people still have plans to release equity in order to carry out home improvements, or even buy a new property. To me, that suggests people are seeing this as a storm to weather and are already preparing for brighter skies ahead.”
Andrea concluded: “What’s important to take away from these findings is that everyone within the financial services industry has a greater responsibility than ever to step up and support customers as they come to terms with an ever-changing set of circumstances.”
While it’s impossible to predict what 2023 will bring, we can expect the cost of living to continue to be a headline that will stick around for some time yet. In a year characterised by the unexpected, supporting customers to understand their financial future and find a mortgage deal that’s affordable can open a world of possibilities as they gingerly head into 2023.
If you're interested in how we can help your clients, get in touch today and speak to your Hodge experts.