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Remortgage completions fall 5% while instructions rise

The volume of remortgage completions fell by 5% in June, according to the LMS Monthly Remortgage Snapshot.

However, while remortgage completions slowed, instruction volumes increased by 16.% over the same timeframe.

The overall cancellation rate decreased by 0.45% to 6.01%, while pipeline cases rose by 11% in June.

The average monthly payment decrease for those who remortgaged was £200, and the average monthly mortgage increase was £261.

A total of 42% of borrowers increased their loan size and 49% of those who remortgaged took out a 5-year fixed rate product, which was the most popular product length.

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More than a third (36%) of remortgagers said their primary aim was to release equity from their property.

The average loan increase post-remortgage was £21,586, whilst the average loan decrease was £12,217.

The average remortgage loan amount in London and the South East was £283,685, while the average for the rest of the UK stood at £143,220; this puts remortgage loan amounts 98% higher in London and the South East than the rest of England and Wales.

The longest previous mortgage length was found in the North East at 84.36 months (7.03 years) and the shortest was in the West Midlands at 62.59 months (5.2 years), meaning that the longest was 35% longer than the shortest.

Nick Chadbourne said: “Steady activity and easing restrictions continued to improve lender confidence in June which gave borrowers greater product choice and better deals.

“However, instructions were still not as high as we would expect in the lead up to the large number of [early repayment charge (ERC)] expiries in July.

“This means that many borrowers who are remortgaging are opting for a product transfer.

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“As low interest rates are still in place across the board, staying with the same lender may give borrowers a cheaper rate than switching, but it is still important that borrowers shop around to ensure they are getting the best deal possible.

“As the purchase market continues to boom, supply is the only factor which might slow it down.

“The end of the stamp duty holiday will have had some impact, but the key drivers to move out of cities, find green space and upsize are all still there to drive demand.

“Until supply is properly addressed, inflated house prices and competitive mortgage rates are expected to stay.

“We expect to see more borrowers opting to stay put in this environment, boosting remortgage activity and contributing to a healthy pipeline in the coming months.”

By Jake Carter

Source: Mortgage Introducer

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LMS: Remortgage completions up 4.7% in March

Remortgage completions volumes rose by 4.7% in March, according to LMS’ Monthly Remortgage Snapshot.

In addition, instruction volumes continued to rise, up 17.2% in January.

The cancellation rate increased by 0.5% to 7.45% in March, and pipeline figures rose by 12.8%.

The average monthly payment decrease for those who remortgaged in January was £238.

A total of 43% of borrowers increased their loan size, and 54% of those who remortgaged took out a 5-year fixed rate product which was the most popular product length.

The most popular primary aim when remortgaging, at 33%, was to borrow more money.

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The average loan increase post remortgage was £22,999, whilst the average loan decrease post remortgage was £15,523.

Nick Chadbourne, chief executive of LMS, said: “Remortgage instructions grew by nearly a quarter in March as the stamp duty holiday extension increased industry capacity by taking pressure off the purchase market.

“March also brought the market right up to the five year anniversary of 2016’s stamp duty cut for buy-to-let purchasers, which will have contributed to the increase as many landlords begun the remortgage process as their 5-year fixes came to an end.

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“These factors are the most likely cause for the pipeline growth as cancellations remained fairly steady.

“The purchase market is likely to retain the lion’s share of mortgage business through Q2 as government support such as the 95% government-backed LTV scheme and SDLT holiday continue to prop up an already busy market, but this balance should shift as the incentives offered by the stamp duty holiday reduce at the end of June.

“Remortgage-focused businesses should prepare for a growth in enquiries but shouldn’t abandon the other business streams which many have explored while purchases were on top – growth at any time should be seized with both hands, but those who are still reliant on old processes will struggle.”

By Jake Carter

Source: Mortgage Introducer

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Remortgage instructions increased 11.8% in the last week of April

Following a drop of 23% between March and April, due to a sharp fall at the start of April and a subsequent plateau at subdued levels, the volume of remortgage instructions has increased by 11.8% between the weeks commencing 20 and 27 April.

Remortgage completions remained flat through to the end of April, falling 1% compared to March volumes.

There was a significant spike in completions on the first working day of May, outstripping the performance in each of the last two months, as many early repayment charges (ERCs) expired.

Completions on the first working day increased by 63.7% from 1 April, and by 74% from 2 march.

Completions were also 8% higher than 1 May last year.

Remortgage pipeline numbers at the end of April decreased by 2.5% from the end of March.

Instructions exceeded cancellations and completions at the beginning of April, but this trend reversed through the month as cancellations slowly increased, completions remained strong and instructions were below seasonal averages.

This is a usual trend over the Easter period and is comparable to 2019 figures.

Remortgage cancellation levels slowed in the second half of April, dropping by 18.7% from the week commencing 20 April to the week commencing 27 April.

However, April still ended with a cancellation rate of 7.11%, 1.27% higher than March.

This led to a 31% increase in the raw number of cancelled transactions from March to April.

April 2020’s cancellation rate was 2.58% higher than April 2019, equating to an increase of 28.8% in the raw number of cancelled transactions.

Nick Chadbourne (pictured), CEO of LMS, said: “The remortgage market had a flying start to May, with a sizeable increase in completions across the first two working days of the month.

“Performance far exceeded both March and April, which clearly shows the market is working well.

“There’s definitely still work to be done on the processing of more complex cases around witnessing documents and validating ID.

“This is something we need the whole industry to collaborate on if we are to find solutions that ensure all customers are serviced, but overall there are hugely encouraging indications that the industry is coping incredibly well.

“Net numbers are set to be comparable with 2019, and it’s pleasing to see the continuation of normal seasonal trends.

“This is such a positive sign after the initial shock of lockdown, and small variations can be expected in the remortgage market, so slight falls in some areas aren’t cause for alarm.

“Cancellation rates need to be monitored but at this stage are not materially impacting the overall market.

“Completion numbers show that the market remains in good shape, with FAR conveyancing firms continuing business as usual and the hard work across the industry paying off.

“If short-term cancellations and a potential medium-term economic shock can be managed, we’re optimistic that the market will remain strong as we move towards the summer.”

By Jessica Bird

Source: Mortgage Introducer

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There was a spike in remortgage completions ahead of the base rate rise

Over three quarters (76%) of remortgage applications via intermediaries resulted in a completion during Q2 2018, up from 70% in the previous quarter, as activity spiked ahead of the Bank of England’s anticipated decision to raise interest rates above 0.5%.

The Mortgage Market Tracker from the Intermediary Mortgage Lenders Association (IMLA) found for the second time in the last 12 months, the number of homeowners acting to protect themselves from the effects of higher rates and secure the most affordable deals on offer increased in the quarter.

This was directly before a much-anticipated, albeit modest, increase in the  Bank of England’s base rate.

Kate Davies, executive director of IMLA, said: “The last 12 months have seen the end of a decade of record low interest rates that many borrowers have become accustomed to.

“The Bank of England’s response to managing rising inflation had been widely anticipated by the industry and consumers, and it is inevitable that many borrowers will have sought to take advantage of opportunities to lock into very low-rate deals while these are available.

“While customers who remain on tracker and standard variable rates are having to adjust to a second increase in monthly loan repayments in twelve months, competition in the market remains strong and should ensure keen and competitive pricing.

“The enhanced affordability rules introduced in April 2014, following the Mortgage Market Review, were specifically designed to ensure that borrowers would be able to absorb rate increases without suffering detriment.

“For those who took out their mortgages before that date, some may be eligible for further support from the commitment, made by more than 90% of lenders in response to the FCA’s recent Mortgage Market Report to help borrowers switch to better offers.”

A similar spike in activity occurred in Q3 2017 – ahead of the first rate rise in a decade in November, from 0.25% to 0.5%.  At that time, 78% of applications led to completions, an increase from 59% in the previous year.

Data from UK Finance shows that 115,00 homeowner remortgages were completed in Q2 2018, with a combined value of £20.7bn.

The volume of remortgages in June alone increased by 8.4% compared to a year earlier, as homeowners prepared for the Bank of England’s decision.

Separate IMLA research suggested that more than one in 10 (11%) brokers expect the Bank of England to raise rates again before the end of 2018.

Although the majority see no change, more than a quarter of brokers (28%) predicted the remortgage market will continue to grow significantly in H2.

Elsewhere in the market, the picture was generally positive in Q2 2018, with nearly nine in 10 (88%) of all mortgage applications leading to offers. The vast majority (95%) of brokers reported having a confident outlook for the mortgage industry.

Source: Mortgage Introducer