LMS issue their Remortgage Healthcheck Index showing remortgage activity for July 2022

LMS issue their Remortgage Healthcheck Index showing activity for July 2022, indicating a possible rise in two-year fixes to come thanks to historic rate rise.

Key performance metrics:
    • Instructions increased by 3% in July
    • 41% more remortgages completed in July
    • The overall cancellation rate increased by 1.13%
    • Pipeline cases decreased by 1% month on month
Key statistics:
    • £226 average monthly payment increase for those who remortgaged in July
    • 54% of borrowers increased their loan size in July
    • 70% of those who remortgaged took out a 5-year fixed rate product, the most popular product in July
    • 35% said their main aim when remortgaging was to release equity in their property, the most popular response

Regional trends

The average remortgage loan amount in London and the South East was £317,966 while the average for the rest of the UK stood at £150,303, putting remortgage loan amounts 53% higher in London and the South East than the rest of the UK.

The longest previous mortgage length was found in the North East at 82.72 months (6.89 years) and the shortest was in the East Midlands at 63.67 months (5.31 years), putting the longest previous mortgage term 23% longer than the shortest.

Nick Chadbourne, CEO, LMS, said:

“While pipeline cases dropped in July, this isn’t likely to last for long. The next ERC expiry peak coupled with the historic rate rise from the Bank of England at the start of August will result in an increase in those looking to remortgage.

“As people grapple with economic uncertainty, the popularity of five year fixes has hugely increased in comparison to last year. In July 2021, less than half of homeowners remortgaged to a five year fixed rate. This has hugely increased to 70% this year.

“That said, we might see a shift in the type of products being taken up in August. The majority of those who locked into fixed rates in July plumbed for five year products to hedge against rising interest rates, but we might well see their popularity drop in August as people wait to see if rates will drop again towards the end of the year.

“Coping with this demand will be vital for the industry – borrowers, lenders and law firms alike – and we must collaborate to put appropriate solutions in place.”

 

Kindly shared by LMS

Main photo courtesy of Pixabay