The number of borrowers switching to a new lender thanks to Modified Affordability Assessments (MAAs) has more than doubled following regulatory changes last summer, Stonebridge says.
Between the introduction of the new rules in July and the end of last year, the number of transfers concluded via MAAs with a new lender more than doubled.
These rose by 126% year-on-year, from 4,275 to 9,664, data from the Financial Conduct Authority (FCA) shows.
By comparison, the number of product transfers using MAAs changed little over the same period, from 269 to 290, while the number of individual lenders using MAAs rose from eight to 12.
Lenders can now use MAAs when borrowers want to shorten their mortgage term, or when a mortgage with a new lender is more affordable than their existing home loan or a new product from their current lender.
Stonebridge chief executive Rob Clifford welcomed the increase in MAA use, but stressed that huge opportunities remain, with “plenty of options” for more homeowners to take advantage of.
He believes some borrowers will still wrongly assume that they have no options and that they would be better off taking their existing lender’s product transfer offer without seeking advice. It may also be that the industry is still adapting to the new freedoms.
Stonebridge chief executive Rob Clifford said: “When the FCA made this change last summer, MAAs struck us as a boon for consumers, but more needs to be done to help them benefit from them. MAAs are a game-changing opportunity for many homeowners, giving them much more flexibility to reduce their borrowing costs.
“There are many circumstances where homeowners fear affordability tests and wrongly assume they must stick with their existing lender. This is where a mortgage broker can really come into their own and it is a huge opportunity with plenty of scope for many more borrowers to take advantage of it.
“One of the ways they can do this is by making the most of their existing customer relationships and the data they hold on mortgage expiring terms. The trajectory of interest rates may be uncertain at this time because of conflicts but as long-term interest rates decline, guiding borrowers to better financial outcomes will become increasingly valuable to them.”
The MAA rules also appear to disproportionately help people with higher repayments. The average (median) LTV for MAA refinances with a new lender was 54.4% since the rule change.
For MAA refinancings with existing lenders, this was only 25%.
External mortgage lenders lent an average of £200,999, while those who remortgaged with their existing lender borrowed £95,488.
The FCA released the data to Stonebridge in response to a Freedom of Information Act request. A delay means that some of the sales in the data would have been approved before the rule was changed.