Remortgage approvals hit the highest score on record in the latest Remortgage Healthcheck Index by LMS driven by high product transfer levels.

The LMS Remortgage Healthcheck Index shows the overall health of the remortgage market and tracks changes in four key indicators: volume and value of remortgage approvals, remortgage borrowing costs, homeowner equity value and consumer sentiment.

The index also shows how remortgage activity is performing alongside wider market conditions and how the key indicators are affecting consumer spending and habits.

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Each indicator is scored between 0 and 100, with scores between 40 and 60 considered neutral, a score below 40 considered negative, and score over 60 seen as positive for the industry. The overall healthcheck score is the weighted average of each indicator score.

The overall healthcheck of the market placed it at 60.2, remortgage approvals stood at 70.9, borrowing costs at 52.1 home equity at 66.1 and borrower sentiment at 54.6. s.

Nick Chadbourne, CEO at LMS, said: “Strong scores for both the approvals and equity indicators are a really encouraging sign for the health and resilience of the market, and to see the highest index score for 5 years is very promising.

“House prices rising mean more borrowers qualify for better loan-to-value products, and bigger loans mean they have more control over their biggest asset – their home. Many have been hit hard by the pandemic, but the vast majority have more cash in the bank as hospitality and travel spending has dropped. Growing loans for home improvements are a sign of confidence as homeowners are prepared to spend those savings.”

“It is also promising to see an increased number of cases being approved by lenders, as credit availability will be key to the continuing economic recovery. It’s likely that a lot of theses cases were product transfers, which undoubtedly provide an easier journey, but don’t often give the best value for money. If the ultra-low Bank of England base rate, high demand and government incentives like the stamp duty cut continue over the next months, we could see even more improvement, but those who just product transfer might lose out in the long-term.

“Creeping repayment rates towards the end of Q3 were a slight downside as the average rate for a 5-year fixed rate product was 2.49% in September, the highest average rate since April this year.

“We are optimistic for continued strong performance in Q4, though we should retain a note of caution given that lockdown measures have returned. Vitally, the housing market remains open for business, so any impacts will hopefully be far smaller than the first time around.

“The focus is on home moving at the moment, taking up the majority of time across the industry, but this should tail off in 2021 and we should see a move back to remortgages and away from product transfers. Borrower sentitment has remained steady, and we hope to see borrowers retaining the same resilience that has kept the market buoyant since April.”