Almost half, 46% of borrowers, increased their loan size whilst 52% of those who remortgaged took out a 5-year fixed-rate product. Some 30% of remortgagers’ primary aim when remortgage was to release equity from their property.

Nick Chadbourne, CEO of LMS, said: “February was a tale of two halves for the mortgage market. On the one hand, speculation over whether the Stamp Duty Land Tax holiday deadline would be extended was at a crescendo, fuelling an uneasy mortgage market as sellers and buyers considered delaying purchases while waiting for clarity. On the other hand, lenders regaining confidence paired with a raft of ERC expiries contributed to a healthy remo market, pushing instructions up for the second consecutive month.

“The primary aims reported by borrowers highlight the growing split in borrower circumstances created by the pandemic. 30% of borrowers’ primary aim when remortgaging was to release equity from their property. Borrowers may choose to do this for a variety of reasons but having the confidence to remove cash from the security of their home to fund other payments suggests these borrowers felt optimistic on the future of the market and in a secure, financial position.

“Conversely, a nearly equal portion of borrowers’ (27%) primary aim when remortgaging in February was to reduce monthly payments. While it is promising to see borrowers cashing in on the low repayment rates on offer, many borrowers may be relying on lower payments rates to keep up with repayments and as we move closer to the end of mortgage payment holidays and the furlough scheme, it is essential that brokers are clear on their client’s financial position to ensure the right product is secured.

“Looking ahead, we can expect a busy few months which will be largely fuelled by homeowners’ changing motivations due to the on-going pandemic, such as a greater importance placed on home office space and gardens. The purchase market activity will be bolstered by the stamp duty holiday extension, in the short-term, but there are fears the cliff edge has only been moved the later in the year despite the tapering. We expect remortgage activity to remain strong, with increasing industry capacity as we slowly return to the office and a healthy number of ERCs promoting healthy competition and keeping rates down.”