The LMS remortgage snapshot for the month also found that the cancellation rate for remortgages rose by 0.43 per cent to 7.74 per cent, which was the third month in a row that cancellations went up.
The firm put thsi down to a preference for product transfers.
Nick Chadbourne (pictured), CEO of LMS, said although the contraction of the pipeline was not as significant as October, “we are still seeing a drop in remortgage activity”.
While there was a one per cent rise in instructions for remortgage, Chadbourne said: “Cases did not progress through the journey.
“Instead, product transfers have been particularly attractive for borrowers looking for a comparable product, which has only exacerbated what is always a time of reduced activity over the festive period.”
Five-year fix preference
A five-year fixed product was the most popular choice in November, selected by 36 per cent of remortgagors. A two-year fix was the second preference, as 34 per cent of remortgagors chose this option.
Some 14 per cent of borrowers went for a tracker and just three per cent opted for a 10-year fix.
A desire to lower monthly payments was the most popular reason to remortgage, as cited by 27 per cent of respondents. A fifth reduced their monthly repayments by an average of £422. Of the 70 per cent who saw their monthly repayments rise, this went up by an average of £537.
Some 23 per cent remortgaged for security with their monthly repayments and a fifth wanted to release equity or borrow more money. Some 43 per cent increased their loan size and saw it go up by an average of £24,870.
A fifth reduced their loan size by an average of £20,261.
Rate expectations
Some 16 per cent of borrowers expected interest rates to go up within the next year while a quarter expected this to rise in the next three months. Some 36 per cent of respondents did not think rates would increase.
Chadbourne added: “Swap rates are dropping which may be a sign of a further drop in inflation on the horizon. Lenders are being more competitive with pricing as they start to look towards 2024, especially as house prices are also falling.
“This is giving rise to additional borrowing requirements or changes in terms, or both, which naturally are more conducive to a full remortgage so we expect the pipeline to pick up at the start of the new year.”
