Product innovation and base rate increase likely to drive up instructions in May
Monthly payments increased by an average of £300 for those who remortgaged in April, data from conveyancing services provider LMS has shown.
While instructions decreased by 38% last month, there were 9% more remortgages completed and 37% of borrowers also increased their loan size.
About half, or 51%, of those who remortgaged took out a five-year fixed rate product, which was the most popular product in April. More than a quarter, or 27%, said their main aim when remortgaging was to lower their monthly payments.
The latest LMS Monthly Remortgage Snapshot also revealed that remortgage loan amounts were almost 95% higher in London and the South East, at £301,621, than the rest of the UK at £154,478.
Nick Chadbourne (pictured), chief executive at LMS, said the anticipated Easter lull was primarily responsible for pushing down instruction and pipeline figures.
“These seasonal trends always play a part in market activity, although we expect that there are also increasing numbers of borrowers opting for product transfers instead of remortgages amid the affordability squeeze,” Chadbourne added. “With borrowers primarily focused on lowering their monthly payments, many are also more inclined to bide their time and wait for better products to become available.
“However, we’re expecting instructions and the pipeline to increase again in May. With the Bank of England raising the base rate to 4.5%, more of those who are on trackers or SVRs will look to switch to a more competitive fixed rate product, and the introduction of innovative products such as Skipton’s 100% mortgage will only encourage this further.
“Aside from that, lenders are generally relaxing their affordability criteria thanks to there being more economic certainty and confidence in employment and house prices, playing into the prediction of an increased pipeline.”
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