Instruction volumes across the remortgage market climbed by 19.1% during February, according to new data published by LMS.

The latest LMS Monthly Remortgage Snapshot also showed that remortgage completion volumes fell by 17.8% during the month, while cancellations stayed constant with the overall rate falling by just 0.05%.

LMS stated that a rise in instructions paired with falling completions led to an 8.7% increase of activity in the pipeline.

The data also revealed that the average monthly payment decrease for those who remortgaged in February was £217.

Fifty-two per cent of those who remortgaged took out a five-year fixed rate product – the most popular product in February. Furthermore, for 30% of borrowers who remortgaged during the month, LMS found that their primary aim was to release equity from their property.
 
LMS CEO, Nick Chadbourne, suggested February had been “a tale of two halves” for the mortgage market.

“On the one hand, speculation over whether the Stamp Duty Land Tax holiday deadline would be extended was at a crescendo, fuelling an uneasy mortgage market as sellers and buyers considered delaying purchases while waiting for clarity,” he said.

“On the other hand, lenders regaining confidence paired with a raft of ERC expiries contributed to a healthy remortgage market, pushing instructions up for the second consecutive month.

“The primary aims reported by borrowers highlight the growing split in borrower circumstances created by the pandemic. Thirty per cent of borrowers’ primary aim when remortgaging was to release equity from their property.

“Borrowers may choose to do this for a variety of reasons but having the confidence to remove cash from the security of their home to fund other payments suggests these borrowers felt optimistic on the future of the market and in a secure, financial position.”

Chadbourne added that there could be a busy few months ahead for the mortgage market, which will be “largely fuelled” by homeowners’ changing motivations amid the coronavirus pandemic.

“The purchase market activity will be bolstered by the stamp duty holiday extension in the short-term, but there are fears the cliff edge has only been moved the later in the year despite the tapering,” he added.

“We expect remortgage activity to remain strong, with increasing industry capacity as we slowly return to the office and a healthy number of ERCs promoting healthy competition and keeping rates down.”

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