LMS, the conveyancing solutions provider, has today published its latest weekly update, tracking remortgage market performance through the COVID-19 crisis.
The update includes LMS’ proprietary data on remortgage instructions, completions, cancellations and pipeline activity.
In this update, the ‘first’ week of June refers to 01.06.2020 – 05.06.2020, the ‘second’ week of June refers to 08.06.2020 – 12.06.2020, and the ‘third’ week of June refers to 15.06.2020 – 19.06.2020. All comparisons to the third week of May refer to 11.05.2020 – 15.05.2020.
Instruction volumes remained steady in the third week of June, maintaining the increases which have characterised market activity over the last few weeks and up 5% compared with the final week in May.
The four-week rolling average fell just 1.3%, indicating consistency in this area of the market.
The weekly average number of instructions for June is now the highest this year, sitting 3.3% higher than February which had been the highest month to date, hinting at a return to pre-COVID levels of market activity.
Completion volumes followed the monthly trend with reduced numbers in the third week of June, down 9% from the second week, compared to the spike that appears consistently at the start of the month.
Month-on-month performance significantly improved this week, with the third week of June recording more than six times as many completions as the equivalent week in May.
Despite this increase, June is still on course to record the lowest number of completions year to date, matching expected annual trends as we progress through a traditionally quieter month for the market.
The sustained high instruction volumes, accompanied by a drop in cancellations, mean that pipeline cases are currently on track to be 7.4% higher than May at month end.
This will generate the largest number of carried forward cases in 2020, but overall case volumes are still on track to be around 12.2% lower than the same time last year.
Even though activity is expected to pick up in July, year-on-year performance will most likely continue to be below 2019.
The four-week rolling average cancellation volume fell by 0.43% in the third week of June, as the number of cancelled transactions dropped from the second week of the month.
Month-on-month, cancellations are down 40% compared with the third week of May, reflecting week-to-week variations.
The overall cancellation rate, as a proportion of all remortgage transactions, for June is currently 5.82%, on track to be lower than May and in line with recent averages, but higher than June 2019.
Nick Chadbourne, CEO of LMS, commented on the figures:
“It is promising to see that the remortgage market is starting to steady, shown by our data.
“At a time of significant economic upheaval, positive signals across all metrics will be a relief for many.
“Instruction volumes continue to be the highest-performing measure, as borrower appetite improves week by week and product choice increases.
“The easing of lockdown restrictions will hopefully continue to reduce consumer concerns around social interaction and support increased activity in the remortgage market and the economy as a whole.
“Completion activity is in line with seasonal expectations, with a foreseen fall in volumes in line with fewer ERCs.
“June is historically a quieter month for remortgages, in the current climate volumes have been further impacted and the data reflects this.
“There is reason for cautious optimism when looking at the coming months with a healthy pipeline and falling cancellation rate.
“Seasonal trends are likely to be impacted over the next few months and this summer will likely be different to any which we have seen in the last few years.
“Many people may choose to forego their annual summer holidays and divert funds to other areas, such as home improvements and savings, given the current climate and the increased financial pressure for lots of households.
“Lots of homeowners will be seeking cost-saving opportunities, and different individual circumstances could therefore impact decisions on remortgaging.
“The wider economy remains a threat to all parts of the remortgage chain, and this next period may continue to throw up unexpected developments and trends.”