The outlook for the remortgage market remains positive despite a fall in overall market confidence at the end of 2020, according to the latest LMS Remortgage Healthcheck Index.
The index, which monitors four key indicators (remortgage approvals, borrowing costs, homeowner equity and consumer sentiment), reported a neutral outlook across all indicators except homeowner equity which was positive in the final quarter of 2020.
Nick Chadbourne (pictured), CEO at LMS, said: “Despite the fall in the overall index score, we can see a positive outlook for remortgaging in 2021.
“The main drivers for the fall were lower remortgage approvals and borrowing costs indicator scores, but given the wider economic and social climate these aren’t unexpected.
“Continued caution from lenders meant high LTV products remained sparse and repayment rates crept back up, making the market less accessible to borrowers. Despite this, the number of approvals remained relatively flat, showing demand is still there.
“Data from Moneyfacts.co.uk also shows that SVR rates still ended 2020 at 0.48% below rates at the beginning of the year, and 5-year fixed rates stood at 0.05% lower than those in January, so it wasn’t all bad news for borrowers.
“Looking ahead, the surging house prices we saw through Q4 2020 did a good job of propping up the remortgage market as homeowners released equity from their property to cash in on its rising value or to secure a better deal.
“The rising prices have continued through 2021 so far, continuing to sustain the market and hinting at continued growth through this year.
“We have already seen an uptick in remortgage activity in Q1 2021.
“Government support such as the extension of the SDLT holiday and fully-backed 95% LTV products take pressure off the purchase market in the short-term which may open up more opportunities for remortgage cases.
“However, these schemes add fuel to an already well-lit fire, and there needs to be continued support and clarity from the government to cement lender confidence and give the industry the necessary time to allow remortgage activity to strengthen through the year.”