The latest remortgage figures from conveyancing service provider LMS show negative trends in all key performance metrics. However, CEO Nick Chadbourne (pictured) said the dip is to be expected and activity should build over the coming months.
Despite a rise in completions in July and an expectation that activity would remain steady over the summer, instructions, completions and pipeline cases all fell, while the cancellation rate increased.
Instructions decreased by 8%, and 28% fewer mortgages were completed in August compared to the previous month. The overall cancellation rate increased by 6% and pipeline cases fell by 1%.
‘August saw the usual seasonal dip in remortgage activity, but the market remains resilient,’ Chadbourne said. He added:
“With households now back into a routine after summer, we expect activity to build as the year progresses, echoing the rebound we saw this time last year.”
Two-year deals remain the most popular, with 47% of borrowers opting for short-term security. Five-year deals made up the majority of the remainder at 41%, with 3% on three-year deals, 1% committing to ten years, 3% taking out tracker mortgages and 4% with a non-specified other type of deal.
The total loan size was increased by 45% of borrowers, with an average loan increase of £22,615.38 and an average monthly repayment increase of £354.21. Around a fifth of borrowers (19%) reduced their total loan size by an average of £11,327.79, reducing monthly payments by an average £211.47.
The primary goal when remortgaging remains to release equity on the property, cited by 30% of borrowers – up 2% since July. A quarter (26%) wanted to reduce monthly payments, and 16% wanted to lock in good deals.
For the borrowers who chose fixed rate deals, 77% said they wanted the security of knowing how much they’d be paying each month. Worry about the economic climate was cited by 9% of remortgagers.
Borrower expectations of interest rate increases remained broadly the same, with 42% expecting an increase within a year, 21% believing an increase is more than a year away, and 36% not expecting any increase.
