Remortgagors turn to five-year fixed rates
Almost half of borrowers who remortgaged in April opted for a five-year fixed rate, according to the latest remortgage snapshot from conveyancing panel LMS.
It’s data found that 48 per cent of remortgaging borrowers opted for a five-year deal, up from 45 per cent in March.
In total 97 per cent of remortgaging borrowers opted for a fixed rate deal, with LMS noting that 61 per cent of borrowers expected a base rate rise in the next 12 months.
Two-thirds of borrowers picked a remortgage product because it had been recommended by a broker.
LMS described this as a “remarkable increase” from November 2018 when just 39 per cent opted for a product on the basis of a broker’s insight.
The firm suggested that intermediaries are “very quickly becoming the go-to source of advice when borrowers review their current mortgage product”.
The study suggested that 48 per cent of those moving to a new deal increased their total loan size as well, by an average of £19,797. Less than a quarter saw their loan size fall when remortgaging, on average by £12,365.
Repayment ups and downs
Around 46 per cent of borrowers moving to a new deal saw the size of their repayments drop as a result. On average these borrowers are repaying £206 less each month as a result.
However a similar number, 45 per cent, are facing larger repayments after remortgaging, on average by £198 a month.
LMS found that the average remortgage amount stands at £171,622, though there are sharp regional differences. For instance in London it is £324,983, while in Northern Ireland it drops to £106,692.
Nick Chadbourne, chief executive officer of LMS, suggested it was interesting that so many borrowers were opting to increase their loan size in order to take advantage of the competitive rates currently available.
He continued: “This gives borrowers the flexibility to alter their monthly repayments and use the additional funding on home improvements, as we are seeing many choose to ‘improve not move’.”