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Product transfers lead to healthiest remortgage market in five years – LMS

  • 04/01/2021
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Product transfers lead to healthiest remortgage market in five years – LMS
The remortgage market recorded its most positive broker rating in five years in the third quarter of 2020 due to strong product transfer activity, data from LMS showed.


Its latest Remortgage Healthcheck Index in partnership with the Centre of Economics and Business Research (CEBR) showed brokers gave the sector an overall score of 60.2 for the period, up from a score of 48.5 in the previous quarter. 

The index asked brokers to rate the overall health of the remortgage market with scores between zero and 100, and a score of 60 or above suggests positive sentiment for the industry. 

With regards to remortgage approvals, during Q3 broker sentiment improved quarterly by 11.5 to a score of 70.9, the highest value on record. As borrowers were pushed to switch products rather than remortgage, people continued to be approved for loans throughout the pandemic despite lender capacity issues. 

A rise in house prices also kept the sector healthy, as homeowner equity increased from zero when the property market shut down in Q2 to 66.1 once it reopened. 

Attitudes towards borrower costs slipped by 3.6 points to a score of 52.1 as increased rates made borrowing more expensive for switching homeowners following lender decisions to up rates to minimise risk. 

Additionally, borrower sentiment slipped slightly by 0.1 points to a neutral score of 54.6 as fewer people opted to increase their loan size. 

Nick Chadbourne, CEO at LMS, said: “Strong scores for both the approvals and equity indicators are a really encouraging sign for the health and resilience of the market, and to see the highest index score for five years is very promising.

“It is also promising to see an increased number of cases being approved by lenders, as credit availability will be key to the continuing economic recovery. It’s likely that a lot of theses cases were product transfers, which undoubtedly provide an easier journey, but don’t often give the best value for money.”

He added: “If the ultra-low Bank of England base rate, high demand and government incentives like the stamp duty cut continue over the next months, we could see even more improvement, but those who just product transfer might lose out in the long-term.

“We are optimistic for continued strong performance in Q4, though we should retain a note of caution given that lockdown measures have returned. Vitally, the housing market remains open for business, so any impacts will hopefully be far smaller than the first time around.”


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