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Remortgage market in ‘overwhelmingly healthy’ shape ‒ LMS

  • 14/09/2021
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Remortgage market in ‘overwhelmingly healthy’ shape ‒ LMS
The remortgage market is in an extremely healthy position, the latest ‘health check’ from LMS has suggested, with growth seen across all key indicators.

The health check looks at factors like approval levels, borrowing costs, housing equity and consumer sentiment to get a feel for how the remortgage market is performing, and is published quarterly.

Brokers are asked to rate the health of the remortgage market for these different areas, with scores of up to 100. A score of 60 or above suggests positive sentiment for the industry while scores below 40 are negative. 

Competition driving rates down

Notably the borrowing costs indicator improved to its best position since the first quarter of 2017, with a score of 70.2, suggesting that competition among lenders is leaving remortgage borrowers in a significantly better financial position. LMS noted that the cost of two‒ and five-year fixed rates have dropped for two consecutive quarters, despite lenders facing increased borrowing costs, demonstrating how determined lenders are to remain competitive.

Some brokers have told Mortgage Solutions that the rate war for borrowers with at least 40 per cent equity is driving a jump in mid-deal remortgage enquiries.

In addition, the homeowner equity figure rose to its highest in record, while sentiment among borrowers improved for the third straight quarter, itself registering a new record high.

LMS noted that a factor in the homeowner equity rise was the stamp duty holiday, and the way that it has driven house prices upwards, noting that there remains an “extreme imbalance between supply and demand” as well as increased affordability thanks to record low interest rates.

Boost to the remortgage market

Nick Chadborne, CEO at LMS, said that only inflation and interest hikes could stem the “upwards trajectory” of house prices, noting that as long as interest rates remain low, demand will remain high.

He continued: “Until supply is resolved, inflated house prices are set to remain, and we expect to see more borrowers opting to stay put in this environment, boosting remortgage activity and contributing to a healthy remortgage market for the next few months. “

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