Reduction in high LTV products hits remortgage instruction levels

LMS, the conveyancing solutions provider, has today published its latest remortgage market update, now to be released every two weeks, tracking remortgage market performance through the COVID-19 crisis.

In this update, the ‘final’ week of June refers to 22.06.2020 – 26.05.2020, the ‘first’ week of July refers to 29.06.2020 – 29.05.2020 and the ‘second’ week of July refers to 06.07.2020 – 10.07.2020. All comparisons to the ‘first two weeks’ of June refer to 01.06.2020 – 12.06.2020.

Remortgage instructions

The continued growth of instruction volumes seen in past weeks has begun to slow as we move into July.

There was a 12.4% reduction between the final week of June and the first week of July, followed by a further 5.5% decrease in the second week of July.

The average volume of instructions for the first two weeks of July is significantly lower than the average for the first two weeks of June (-26.1%).

This decrease in instructions is in line with what we might expect to see at the end of a quarter as lenders take stock of active applications.

Remortgage completions

The first week of July saw a significant surge in completions with volumes more than tripling from the previous week.

A rise in completions in the first week of the month is expected, but the first week of July’s figures feature at the highest level seen this year.

Furthermore, completion volumes in the first two weeks of July stand 70.9% higher than in the first two weeks of June.

Completion volumes typically fluctuate greatly throughout the month and looking at rolling averages can provide more reliable insight.

With this in mind, the 4-week average volume between 15/06 and 10/07 shows a more stable increase of 4.5% from the 4 weeks between 08/06 and 03/07.

Remortgage cancellations

Cancellation volumes have spiked by 51% between the first and second weeks of the month, after a smaller rise of just 3.7% between the final week in June and the first week of July.

Volumes are also up by 7% when comparing the first two weeks of June with the first two weeks of July.

This rise in cancellations might be expected given that Q2 has concluded.

A large majority of offers with a 6-month timeline will now be expiring, feeding into the number of cancellations.

Remortgage pipeline

The high completion and cancellation volumes we have seen in the past two weeks, paired with decreasing instructions, have generated little pipeline movement between the first and second weeks of July, increasing by just 0.2%.

After beginning the month with a particularly strong pipeline, active cases have now decreased by 13.9%.

Nick Chadbourne, CEO of LMS, comments:

“When considering the recent market data, we should consider the bigger picture surrounding the reduced remortgage instruction volumes.

“The home-moving market is back up and running and is likely to be impacting brokers’ time which now must be split between dealing with both new home buyers and remortgagers.

“The dominance the remortgage market has enjoyed since March is concluding as brokers must focus on assisting clients looking to move in a difficult market, this change is likely impacting the rate and volume which we are seeing new instructions.

“While the decreasing instruction volumes cannot be ignored, they are not yet cause for concern.

“Typically, we have fewer ERC expiries in the summer, which naturally leads to a slower quarter for instructions.

“In addition, the reduction of 90% and higher LTV products available are reducing the number of borrowers able to remortgage and therefore impacting the number of instructions.”


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