Fall in remortgage instruction volumes, LMS data finds

Instruction volumes for remortgage dropped by 25.6% between the first and second weeks of May, according to new data released by Legal Marketing Services (LMS).

The conveyancing solutions provider highlighted that the drop was largely as a result of one fewer trading days due to the VE Day Bank Holiday in the week commencing 4 May. Had Friday 8 May instead run at average daily volumes for the rest of the week, LMS suggested the disparity would have been smaller, at -7.3%.

Following a significant spike in remortgage completions at the end of the previous week – 1 May brought a 63.7% increase in completions from the first working day of April – LMS recorded a slight drop in completions, week-on-week, between the first and second weeks of May.
However, there were still 57.4% more completions in the week commencing 4 May than in the week commencing 6 April, both the second weeks of the month, which LMS indicated means the normal start-of-month completions surge had continued longer into May, than in previous months.

Overall, LMS said it was seeing completions are consistently running ahead of both March and April, and that May 2020 volumes are ahead of May 2019.
LMS CEO, Nick Chadbourne, commented: “The remortgage market continued its strong start to May with a prolonged surge in completion volumes, which is testament to the industry’s hard work in developing and investing in the processes required to handle non-standard and complex cases, under remote working conditions.
“We have seen a dip in the volume of instructions, though this could be attributed to the VE Day Bank Holiday on the second Friday in May, without which levels would have remained broadly on a par with what we have experienced throughout lockdown.”

A continued strong performance in terms of completions, combined with a rise in cancellations and a slightly decreased rate of instructions, LMS noted, means the remortgage pipeline has continued its recent contraction. Compared with the same point in 2019, the data showed remortgage pipeline cases are down 10%.
Furthermore, in the week commencing 4 May, the conveyancing solutions provider said cancellations reached the highest level since the beginning of the lockdown period, with 23.4% more cancelled transactions than in the next closest period, the week commencing 20 April.

“Wednesday’s announcement that the housing market can reopen will likely have a sizeable impact on the remortgage sector,” Chadbourne added. “In the wider housing sector, we’ve already seen that online demand has increased for buyers. With changes in the economy impacting personal finances, including access to mortgages, we may see an increase in haggling through the sales process.
“We expect to see a release of pent up remortgage demand in the coming weeks, but it will take time to work through the backlog. Tens of thousands of applications awaiting a physical valuation across both the purchase and remortgage markets can now be progressed as physical surveys resume, and higher value LTV products which had been stuck at the underwriting stage can proceed.”

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