LMS: Remortgage market remains steady in Q3
The remortgage market remained steady in Q3 according to LMS’ latest Remortgage Healthcheck Index.
The LMS Remortgage Index reached 50.2 in Q3 2019, a rise of 0.9 points from 49.3 in Q2 and giving a neutral overall score.
Remortgage approvals also rose by 5.5 points, boosting the overall score of the healthcheck.
Borrowing costs, homeowner equity and borrower sentiment each dropped from Q2 to Q3, with borrowing costs falling by two points.
Homeowner equity and borrower sentiment recorded reductions of 0.6 and 0.1 points respectively.
Almost half (45%) of those who remortgaged in Q3 took out a 5-year fixed rate deal which retained its position as the most popular option for consumers from Q2.
The value of approvals relative to house prices was down 1.9% year-on year.
The combined consumer sentiment indicator for Q3 declined slightly from Q2, falling to 56.9 from 57.0.
Nick Chadbourne (pictured), chief executive at LMS, said: “So far remortgaging has continued to underpin activity across the wider mortgage market, as competitive rates and peaks in ERC expiries have driven approvals upwards.
“The remortgage sector kept the mortgage industry buoyant in the face of slow house price growth in Q3, showing its importance in overall performance.
“Considerable political and economic uncertainty didn’t have the negative impact many feared, with remortgage approvals bouncing back sharply from Q2’s comparative decline.
“Many homeowners chose to stay in their existing property, rather than move, which may explain slightly lower consumer confidence levels.
“We did not see lower lender costs benefit remortagagers as much as we might, as the spread between borrowing and lending costs has increased, suggesting that lenders are wary of potential economic turbulence on the horizon.
“Spreads are likely to narrow in Q4, however, as concern over Brexit fades and product rates have been falling across the board.
“There is still a significant opportunity for remortgagors to save money on their monthly repayments, and we hope to see improvements in the conveyancing and remortgaging process over the next year.
“Collaboration across the whole industry will be key to this, and LMS will be working hard to lead this effort.”