Pipeline set to build over the rest of 2023
While remortgage instructions increased by over a quarter in March, completed remortgages decreased while the cancellation rate slightly rose, data from conveyancing panel management services provider LMS has shown.
According to the latest LMS Monthly Remortgage Snapshot, instructions increased by 28% last month, but there were also 7% less completions and the cancellation rate grew marginally by 1.36%.
“Although both completions are down and cancellations are up, this was expected,” Nick Chadbourne (pictured), chief executive at LMS, commented. “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.
“As the year progresses, we know that 2023 has a raft of product expiries that will culminate in 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.”
Chadbourne, however, said that a big build in instructions and pipelines can be expected as the year goes on, starting in April, when instructions are likely to rise after the usual Easter dip.
“More generally, while products remain competitive, inflation also remains high so it’s normal to expect the Bank of England to raise the base rate over the summer,” he pointed out. “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.”
Meanwhile, the LMS report also showed that those who remortgaged in March saw a £310 average monthly payment increase.
It also found that 41% of borrowers increased their loan size last month, and that a majority, or 53%, of those who remortgaged took out a five-year fixed rate product – the most popular product in March.
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