LMS’ Remortgage Snapshot for the month showed that remortgage completions fell by 31 per cent, and the overall cancellation rate rose by around 0.35 per cent to four per cent.
The firm added that the latter impacted the pipeline, with these cases falling by two per cent month on month.
It explained that this was due to people cancelling rates they had secured in December and reapplying for lower rates.
Majority upping loan size
The report also found that nearly three quarters of borrowers, 70 per cent, increased their loan size this month. The average monthly repayment increase came to £257.
Around 12 per cent kept their monthly remortgage repayments the same, and 18 per cent lowered their monthly remortgage payments. The average monthly repayment decrease was £270.
The report said 40 per cent of borrowers upped their total loan size, with the average loan increase coming to £18,802.
LMS said 37 per cent saw no change in their total loan size, while nearly a quarter cut their total loan size. The average loan decrease post remortgage was £13,743.
Five-year fixed rate most popular option
More than half of borrowers opted for a five-year fixed rate, with around a quarter choosing a two-year fixed rate.
Around 13 per cent selected a tracker and only three per cent chose a 10-year fixed rate.
The report said that the majority opted for security over monthly payments, with over a quarter respectively citing economic concerns and worries about job security leading them to want to lock in a fixed rate now.
Nearly a third said that the primary goal when remortgage was to lock in a good deal now and gain longer-term security.
Around a quarter said they wanted to lower monthly payments and 20 per cent said they wanted to release equity.
Nick Chadbourne (pictured), chief executive of LMS, said: “Instructions continued to rise in February as expected as people looked to lock in rates before they rise again – this is to be expected since we have seen swap rates bottom out, and the majority of borrowers continued to go after five-year fixed rates in a push for longer term security.
“Despite this, the pipeline contracted as a result of a simultaneous increase in cancellation rates – this was predictable, though, as people who secured rates in December started cancelling and reapplying for more attractive rates.”
Chadbourne said that going into March there was likely to be an uplift in instruction due to the early repayment charge spike expected at the end of the quarter.
“This will be tempered a little as affordability remains a challenge, and with the Spring Budget doing nothing to help the housing market, this will be unlikely to go away anytime soon,” he noted.
He continued: “What we needed was measures to help people get on the property ladder, with the government taking steps to increase housing stock and therefore improve affordability, and to make the long-term rental market more stable by easing punitive measures on landlords, but we didn’t see any of that.
“Hopefully, there will be more input in the coming months, but until then we are likely to see reduced activity overall as people effectively wait.”
