LMS has reported a rise of 7.7% in remortgage instructions in December 2020.

In its Monthly Remortgage Snapshot, LMS revealed that completions volumes fell by 13.1% month on month, while the overall cancellation rate has decreased by 0.7%, as fewer applications were cancelled in December.

LMS’s CEO, Nick Chadbourne (pictured), said: “Instructions back on the rise as lenders prepare for a busy remortgage market in the second half of 2021.

“December’s data shows that instruction volumes are increasing again, following a fall in November which was largely fuelled by more borrowers opting for product transfers (PTs). It is promising to see this uplift, but high levels of PTs paired with record numbers of purchase transactions continue to impact overall volumes resulting in a lower number than what we would expect to see in December.

“We anticipate a reversal of 2020 trends in the second half of 2021, with remortgages taking the lead as the purchase market slows. There are signs that lenders are planning for this switch, reintroducing 90% loan-to-value (LTV) products and increasingly competitive remortgage products. Some savvy borrowers are already cashing in here, with our data showing borrowers who are shopping around for the best deals are decreasing their monthly payments by an average of £236 a month.

“Alongside this, our consumer satisfaction survey revealed 41% of borrowers expect an interest rise within the next year. This is the highest percentage of borrowers to expect an increase in interest rates since August. It is likely this expectation signals of a lack of consumer confidence in the future economy rather than a genuine concern that the Bank of England will increase lending rates, given the recent predictions of a negative rate on the horizon.

“Nonetheless, these concerns are affecting purchasing decisions. Lack of consumer confidence is motivating borrowers to secure a good deal while they can, and they are locking in the low rates for longer terms. More than half (55%) chose a 5-year fixed rate, 6% more than in November, and 9% more than August. An increase in longer-term products will lead to fewer ERC expiries in coming years which will have a knock-on effect for future volumes.”