"Though we are expecting the balance to shift back towards remortgaging, in part down to the expected surge in ERCs at the end of the year, we will also see two spikes in the home moving market"
The cancellation rate rose by 2.55% to 7.81% over the month, while falling completions and growing cancellations led to a pipeline contraction of 14%.
Nick Chadbourne, CEO of LMS, commented: “Housing market activity grew in September as prices rose at the fastest pace for four years, according to Halifax, as demand from home-movers outstripped the supply of available properties. While we are seeing many remortgagers increase their loans, potentially for home improvements, it appears many more are looking to move to a new home, and prices have been driven up accordingly.
“It’s unlikely that the housing market will remain immune to the tough external factors, and the stamp duty holiday granted by the government is likely to be a significant factor in increased recent activity. Though we are expecting the balance to shift back towards remortgaging, in part down to the expected surge in ERCs at the end of the year, we will also see two spikes in the home moving market, which will have a negative impact on remortgaging.
“The first will be just before Christmas, as borrowers look to move before the holidays, and the second will be at the end of March when the stamp duty exemption comes to an end. At both of these times lender and broker capacity to handle full remortgage cases will be extremely stretched, so we will likely see far more remortgagers reverting to product transfers.
“It’s also likely we’ll see a change in the pattern of remortgage instructions as the increasing number of movers stop worrying about changing their current mortgage deal. This will create a slowdown, partly because of the dominance of five-year fixes in recent years.”
