The latest report from LMS, titled the LMS Remortgage Healthcheck Index, has issued a forecast that is basically neutral in the outlook for 2021 on homeowner borrowers seeking remortgaging opportunities. The data is based on the final quarter of 2020. However, some of the situations of the end of the year have changed in the start of 2021. For instance, at the end of the year borrowers had few high level loan to value (LTV) offers and currently there are more on the market with some lenders announcing a 99% LTV remortgage.

The higher the LTV the more likely that homeowners will be in reach of a remortgage. The housing market has been very resilient during the pandemic and that has helped homeowners build equity. Home values have increased. The higher LTV remortgages will put more options in front of homeowners. This didn’t seem the case at the end of last year.

However, the report which covers four key indicators on remortgaging including remortgage approvals, the cost of borrowing, equity available in property, and the sentiment of consumers at the time of the data, does offer information valuable to those in the market as well as homeowners. Homeowners are able to gauge the remortgage lending market and what the lending market could possibly be when they intend to borrow. 

Nick Chadbourne, CEO at LMS, remarked, “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.”