Remortgage activity is likely to drive business levels next year, according to a new survey of intermediaries.

Research by Paragon Bank found that brokers are expecting remortgage activity to be more important to their business than new purchase loans, across both the residential and buy-to-let sectors. 

Its latest mortgage intermediary insight report found that 74% of intermediaries expect that residential remortgage activity will be a key driver of business over the next 12 months, followed by buy-to-let remortgages (56%).

This compares to just 44% saying they expect buy-to-let purchases to drive future business growth, 43% citing first-time buyers home loans, and 33% expecting business levels to be driven by new mortgages for home movers.

The research found advisers were also anticipating growth from other areas, such as later life lending (cited by 33%) and equity release (21%).

Paragon points out that remortgaging has been growing in prominence in the buy-to-let market this year as it marks five years since changes to mortgage underwriting regulations helped drive the growth of five-year fixed rate mortgages.

Just over four in 10 (41%) intermediaries said they are placing a greater focus on client communication towards the end of the mortgage term, with brokers proactively engaging with borrowers 4.5 months ahead of product maturity, on average.

A further one in 10 (11%) of firms reported having streamlined compliance procedures, while just over one in 20 (6%) have put in place dedicated advisers to deal with remortgage business.

Brokers also provided insight into client behaviour with regards to remortgaging, with intermediaries expecting just over half (52%) of borrowers move to a new lender at product maturity.

Asked what they feel their client’s top priorities are when deciding to remortgage, product rate was seen the most important factor by an overwhelming majority (91%) of brokers. However, 63% cited product fees as being important, with 45% stating that ease of doing business was also factor.

Paragon’s managing director for mortgages Richard Rowntree says: “In 2017 the introduction of new underwriting standards made five-year fixed rate mortgages more popular amongst borrowers. With many of these loans now maturing, a rise in remortgaging was something we had expected and planned for.

“It is interesting to see that our experience has been shared by our intermediary partners, with many putting in place measures to adapt to this shift in business mix. 

“Although rates and fees are unsurprisingly primary drivers behind borrowers’ decisions when remortgaging, we also see that aspects outside of cost, such as ease, speed and service, are also priorities. This highlights the benefit to the sector of improving the maturity and remortgage experience for customers”