LMS sees February growth in instructions and completions

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The latest LMS Monthly Remortgage Snapshot for February 2025 reveals a 12% increase in remortgage instructions and an 11% rise in completions, reflecting a buoyant start to the year for the sector.

Despite ongoing affordability pressures, borrowers continue to navigate the remortgage landscape, with 46% opting for a five-year fixed rate product—the most popular choice—while nearly half (42%) increased their loan size.

REMORTGAGE ACTIVITY GAINS MOMENTUM
LMS reported that pipeline volumes grew by 2%, while cancellations fell by 8%, indicating stronger borrower commitment to refinancing options. The data also highlighted an average monthly mortgage repayment increase of £294.66 for those who remortgaged in February, driven by both rate shock from previous low fixed rates and an increase in loan sizes.

Nick Chadbourne (pictured), CEO of LMS, noted that the positive figures suggest a strong outlook for the market: “Q1 has exceeded expectations, which bodes well for the rest of the year. Q1 has the lowest product expiries of the year, so seeing such buoyant activity through January and February bodes well for the rest of 2025.

“We have two significant spikes ahead: at the end of Q2 and towards the end of the year, so expect to see pipelines grow from now until June.”

FIXED-RATE DEMAND REMAINS HIGH
Despite market expectations for interest rate cuts later in the year, borrower sentiment remains cautious, with many opting for longer-term security.
  • 46% of borrowers chose a five-year fixed rate
  • 45% selected a two-year fixed product
  • Only 1% opted for a tracker mortgage

When asked why they secured a fixed-rate deal, the majority of borrowers cited certainty in monthly payments (72%), while 15% were concerned about the economic climate and wanted to lock in a fixed rate.

Chadbourne said: “In terms of behaviours, we are still seeing increases in monthly payments, partly due to borrowers increasing their loan sizes but also due to continued rate shock from historically low rates. We are back to equilibrium on product purchasing, with 45% opting for two years and 46% going for five years. Borrowers are clearly unconvinced about rate reductions despite the rest of the market factoring this in.”

REGIONAL TRENDS HIGHLIGHT LONDON’S HIGHER LOAN VALUES
  • The average remortgage loan in London was £330,239, compared to £164,828 in the rest of the UK, making London loan values 100% higher.
  • The North West had the longest previous mortgage length at 77.87 months (6.49 years), while the East Midlands had the shortest at 71.18 months (5.93 years).
BORROWER MOTIVATIONS FOR REMORTGAGING
The LMS report also examined the primary goals of borrowers when remortgaging:
  • 28% sought to lower their monthly payments
  • 22% wanted to release equity or borrow more money
  • 22% aimed to secure their monthly payments and lock in a good deal
OUTLOOK
With remortgage pipelines increasing and two major expiry peaks ahead in Q2 and Q4, LMS expects remortgage volumes to continue to grow throughout the year. The data suggests that borrowers remain cautious yet proactive, securing fixed-rate products in response to uncertainty over interest rate movements.

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