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Remortgage instructions and completions fall in March but uplift expected – LMS
Remortgage instructions and completions fell in March due to an early repayment charge (ERC) peak in April, but the pipeline of remortgage cases continues to grow.
According to the LMS Monthly Remortgage Snapshot for March, remortgage instructions fell by 26 per cent and 28 per cent fewer remortgages were completed.
The overall cancellation rate rose by 1.11 per cent to around five per cent. However, it noted that pipeline cases rose by two per cent month-on-month.
Nearly half of borrowers, 46 per cent, increased their loan size in March. The average loan increase post-remortgage was £23,156, whereas the average loan decrease was £13,599.
Overall, the average remortgage amount sat at £185,898, representing a 12 per cent drop. In London and the South East this came to £306,318, and £140,179 for the rest of the UK.
Five-year fixed rates are still the most popular product, with 63 per cent of remortgages looking at the option. This continues a growing trend from February where nearly two thirds of borrowers opted for a five-year fixed rate.
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The most popular reason for remortgaging was to release equity in a property with just under a third, 29 per cent, stating that was their primary aim.
Nick Chadbourne (pictured), chief executive of LMS, said consumer demand was high and the focus needed be on “managing capacity in the supply chain”.
He added: “While the figures show a drop in completions, this is entirely expected given the ERC peak at the start of April. The fact that the pipeline grew shows you just how many cases were there waiting for the ERC to drop off.”
Chadbourne feels that while remortgage instructions were down month-on-month, this was likely due to lenders responding to increased uncertainty from the cost of living crisis by pulling products and evaluating affordability more carefully.
He continued: “They are also establishing what capacity they have across the board – underwriting, surveying and conveyancing – so it will be vital for the sector to work out how the supply chain can manage sustained volumes throughout the year.”
“Working closely with their suppliers, lenders will be looking to assist borrowers by providing competitive fixed rates to give surety of costs while dealing with such pressure, and efficient collaboration between all parties will ensure the effective implementation of tech that can help speed up the entire remortgage journey.”