Conveyancer LMS noted it was seeing falling demand for remortgages already and believes there will be two key points during the period that will push the surge for internal switches higher.
Its monthly remortgage tracker showed instruction volumes dipped by 1.3 per cent in September with month-on-month completion volumes falling by 22 per cent and the cancellation rate rising by 2.55 per cent to 7.8 per cent.
As a result of the falling completions and growing cancellations, LMS’ remortgage pipeline contracted by 14 per cent.
The results may not be too surprising as the housing market has been overwhelmed with purchase activity since its re-opening from lockdown and the introduction of stamp duty holidays.
Two spikes coming
LMS CEO Nick Chadbourne noted this pattern, saying: “While we are seeing many remortgagors increase their loans, potentially for home improvements, it appears many more are looking to move to a new home, and prices have been driven up accordingly.”
And he said while remortgaging was likely to rebound to some extent, there will also be two spikes in the home moving market, which will have a negative impact on remortgaging.
“The first will be just before Christmas, as borrowers look to move before the holidays, and the second will be at the end of March when the stamp duty exemption comes to an end,” Chadbourne said.
“At both of these times lender and broker capacity to handle full remortgage cases will be extremely stretched, so we will likely see far more remortgagors reverting to product transfers.
“It’s also likely we’ll see a change in the pattern of remortgage instructions as the increasing number of movers stop worrying about changing their current mortgage deal.
“This will create a slowdown, partly because of the dominance of five-year fixes in recent years.”
The data from LMS continues to show the bias towards five-year fixes, with 47 per cent of remortgages completed being onto a five-year deal.
Just 40 per cent went on to a two-year rate, with two per cent going onto ten-year and tracker deals respectively.