Completion volumes across the remortgage market increased through 2021, new analysis by LMS has indicated, as the industry capacity continued to grow last year.

The average monthly payment decrease for those who remortgaged in 2021 stood at £225, while figures also indicated that 49% of borrowers increased their loan size last year, with the average monthly repayment increase reaching £257.

The data also indicated that 52% of all those who remortgaged in 2021 took out a five-year fixed rate product, which was the most popular product over the course of the year.

LMS CEO, Nick Chadbourne, commented that remortgage activity had “picked up the pace” in 2021, with a steady increase in both instruction and completion volumes after the extension to the stamp duty holiday was announced in March.

“The extension took pressure off the purchase market and gave the industry more time to focus on remortgaging,” Chadbourne said.

“High levels of instructions and completions volumes continued to build throughout the year, with pipelines reaching a peak in Q4 in the lead up to a peak in ERC expiries on 31 December 2021.”

Chadbourne suggested that loan sizes were impacted by an array of factors through 2021. This included a rise in borrowers looking to increase their loan size at the start of the year, when confidence was buoyed by economic recovery and better than expected unemployment rates.

“Numerous businesses also made the permanent decision around hybrid working which fuelled many homeowners to find the right space,” he added. “Some made the decision to move, adding further pressure to the purchase market and increasing prices. For those homeowners who decided to stay put, many invested into their properties to make home working more palatable and enjoyed the rising house prices as a means of releasing equity.

“However, this optimism turned in the final quarter as consumer confidence waned due to rising inflation and increasing interest rates. Rates will continue to rise in 2022 and lenders will change their pricing strategies, making it even more essential for borrowers to shop around to find the right deal. This, paired with such large volumes of ERCs in the second half of the year, will create a very busy remortgage market.”

Looking ahead to 2022, LMS predicted that the remortgage market will see the first effects of “two major product purchasing events”.

“Two-year fixes taken out when the property market reopened in 2020 will begin to expire, along with five-year fixes which were taken out in 2017, when 50% of all products were this type,” Chadbourne suggested.

“This healthy pipeline of activity is set against another base rate increase, the ongoing energy crisis and the post-furlough job market. All of which will all play a part in activity trends.”

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