LMS has published its latest weekly update, tracking remortgage market performance through the Covid-19 crisis.
The update includes LMS’ proprietary data on remortgage instructions, completions, cancellations and pipeline activity.
In this update, the ‘first’ week of June refers to 01/06/20–05/06/20 and the ‘second’ week of June refers to 08/06/20-12/06/20. All comparisons to the ‘second’ week of May refer to 04/05/20–08/05/20.
Instruction volumes continue to increase through June, rising 8.9% between the first and second week of the month. Volumes are currently 16.3% higher than at the end of May.
June’s weekly average number of instructions is currently the second highest in 2020. The only month with a higher weekly average is February, which stands at just 0.7% higher.
There has been a significant drop in completion volumes in the second week of June, falling 53.5% from the previous week. LMS said this is fairly typical for the second week of a month due to a surge in completions at the start of each month. Despite this, when comparing the second week of May with the second week of June, there is still a significant reduction in completion volumes (42.3%).
LMS said that due to seasonality it is typical to see a drop off in completions over the summer; last year, June’s total completion volumes were the lowest for the year in total.
Steadily increasing instructions, paired with the reduced volume of completions, has driven a 2.4% rise in pipeline cases.
Despite the modest growth seen in the pipeline, overall volumes are currently down year on year and volumes through July and August are likely to be impacted.
There was a 22.5% rise in cancellation volumes between the first and the second weeks of June. If one compares cancellation volumes from the second week in June with the second week of May, the June volumes are higher by 20.3%.
Despite this, the overall cancellation rate of June currently stands at 4.92%, which is around the average when compared to recent months on record.
Nick Chadbourne, CEO of LMS, said: “Market performance continues to follow the trend we have seen over recent weeks, showing a combination of both positive and declining metrics. Instructions continue to rise as lenders promote competitively price products and offer attractive rates to customers.
“There are expected to be 10-15% fewer ERC expiries at the end of Q2 compared to the end of Q1. This will negatively impact the pipeline and completion volumes as fewer customers remortgage. However, the real impact on the pipeline will be felt from the increasing number of cancellations and the lack of high LTV products exclude some customers out the market.
“The trend around rising cancellation volumes continues to be a concern. The increase is being driven by changes to consumer personal circumstances, new products becoming available as rates are reducing and older cases being cleared out of the pipeline. All of these combinations could lead to a greater quantum of variance between Q1 and Q2 ends.”