According to LMS’ Monthly Remortgage Snapshot, there were seven per cent fewer remortgages completed in March and the overall cancellation rate increased by 1.36 per cent.
However, the firm said that pipeline cases have grown by nine per cent month-on-month and added that this trend was set to continue for the rest of the year.
Just under half of borrowers increased their loan size in March with the average increase post-remortgage coming to £20,475.
Over a third saw a change in their total loan size, while just under a quarter cut their total loan size by an average amount of £12,064.
Around 70 per cent increased their monthly remortgage repayments, with average increase coming to £310.
Nearly a quarter cut their monthly remortgage repayments, with the average decrease coming to £267.
Around 10 per cent said they saw no change in their monthly remortgage repayments.
Over half elected for a five-year fixed rate and more than a quarter chose a two-year fixed rate. Only 10 per cent selected a tracker and four per cent picked a 10-year fixed rate.
Around 68 per cent said they choose a fixed rate for security over monthly payments, whilst 23 per cent apiece said they were worried about the economy or job security and wanted to lock in a deal now.
A quarter said their primary goal when remortgage was to lock in a good deal now, while 24 per cent wanted to lower monthly payments. Around 23 per cent wanted to release equity in the property.
End of Q4 will see ‘highest ERC spike for five years’
Nick Chadbourne, LMS’ CEO, said that while completions were down and cancellations were up, this was “expected”.
“It is typical to see completions drop in the last month of a quarter as the next early repayment charge (ERC) spike looms and cancellations rising was simply due to the fact that borrowers who secured offers when rates were high continue to shop around for a more competitive deal,” he noted.
Chadbourne continued that in 2023, there was a raft of product expiries that will lead to the “highest ERC spike for five years at the end of Q4”.
“This will be somewhat offset by an increasing number of people looking for product transfers thanks to lessening affordability, but nevertheless we can expect a big build in instructions and pipelines as the year goes on. April will see the start of this, and we expect instructions to rise after the usual Easter dip,” he added.
Chadbourne said that products “remain competitive” but high inflation could lead to another base rate rise over the summer.
“It’s not a given that this will impact mortgage products, but it will drive anyone with trackers or those on SVRs to change products and increase the pipeline further,” he explained.
