Remortgage activity growth starts to slow – LMS

Recent growth in the number of remortgage instructions has started to slow in July, according to new data from Legal Marketing Services (LMS).

The conveyancing solutions provider revealed there was a 12.4% reduction between the final week of June and the first week of July for remortgage instructions, followed by a further 5.5% decrease in July’s second week.

LMS said 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%), but added that the decrease in instructions is “in line” with expectations at the end of a quarter, as lenders take stock of active applications.

LMS CEO, Nick Chadbourne, commented: “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.”

The data showed that the first week of July saw a surge in remortgage completions, with volumes more than tripling from the previous week. LMS suggested the rise in completions in the first week of the month is expected, but the first week of July’s figures were the highest level it has recorded this year, as completion volumes in the first two weeks of July stand 70.9% higher than in the first two weeks of June.

LMS also revealed that remortgage 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.

The conveyancing solutions provider said the high completion and cancellation volumes it has reported in the past two weeks, paired with decreasing instructions, have generated little remortgage pipeline movement between the first and second weeks of July – increasing by just 0.2%.

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