Remortgaging is to dominate mortgage intermediary business in 2023, new research from Paragon Bank has suggested.

A study of over 350 mortgage brokers found that 78% believe remortgaging will be the strongest driver of business over the next 12 months. This was followed by buy-to-let (BTL) remortgaging, which was cited by 51%.

According to Paragon’s findings, a third of brokers claimed (33%) claimed that interest-only mortgages will be a strong contributor of business during the year as borrowers adjust to a higher interest rate environment.

Meanwhile, later life lending and adverse credit mortgages were also highlighted by 29% and 28% of brokers respectively as drivers of business.

However, the study also indicated that intermediaries are less convinced about the sales market in 2023. Less than a quarter (24%) believed home movers would be a significant contributor to business, falling to 23% for first-time buyers, and 18% for BTL purchases.

In terms of product popularity, Paragon also found that brokers were split on whether borrowers would opt for the certainty of a fixed rate mortgage or cheaper variable options.

Just under half (49%) believed that five-year fixed rate mortgages would be the most popular product, with 47% stating that base rate trackers or variable products with no early redemption charges would drive business. Elsewhere, 44% suggested that borrowers would want a two-year fixed mortgage.

“After strong sales markets since the introduction of the stamp duty holiday in 2020, brokers now believe the dial will shift and remortgaging will dominate business,” Paragon managing director of mortgages, Richard Rowntree, commented.

“In the owner-occupied market, many borrowers are due to come off two or five-year fixed rates, whilst the BTL market saw a significant amount of five-year business written in 2018 due to mature.

“We have helped our own customers to product switch by extending the period at which they can switch to six months before maturity, and we stand well-placed to support professional landlords more broadly who are coming to the end of their fixed-rate deals, particularly those that operate as limited companies, who have four or more properties in a portfolio or operate in HMOs.”

He added: “We believe that whilst BTL house purchases will be slower next year than the previous two years, professional landlords will still be looking for acquisitions. A slower market means they are well-placed to pick up stock and we know many are keen to add to their portfolios.”

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