Some 50% of people who remortgaged in November increased their mortgage loans, with an average rise of £21,602 after refinancing, industry figures showed.
The LMS Remortgage Snapshot found that 31% saw no change in their loan size and 19% saw a reduction. The average loan decrease after remortgage was £14,429.
With this, 56% of people saw their monthly mortgage payments go up after remortgaging, by an average of £321.40. For the third of people whose payments fell, there was an average reduction of £358.11.
Just 11% saw no change in their mortgage payments after refinancing.
A five-year fix was the most popular product in November, as selected by 47% of borrowers. This was followed by a two-year fix, chosen by 40% of people remortgaging.
Just 5% of people chose a three-year fixed deal, while 1% went for a 10-year fix and 2% opted for a tracker deal.
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Nick Chadbourne, CEO of LMS, said: “Interestingly, consumer behaviour is appearing to shift. We are seeing a move away from two-year fixed products towards five-year fixed products. The rationale is twofold. Firstly, fewer customers are experiencing rate shock as many are now moving to lower rates, meaning they can tie in for the longer term.
“Secondly, this shift is due to customer expectations around interest rates; while forecasters expect further drops, customers are not as certain.”
Rise in remortgage completions
LMS recorded a 13% rise in remortgage completions in November and a 2% monthly rise in pipeline cases.
The overall cancellation rate dropped by 7%, but there was a 16% fall in instructions to remortgage.
Chadbourne added: “Although we have seen a month-on-month decline in instructions, activity remains strong as the seasonal remortgage boom continues.
“We are entering 2025 with good pipelines, and we can expect a continuation through next year with 20% more product expiries than 2024.”
Lower payments and equity driving remortgages
People who remortgaged in November did so with the intention of reducing their monthly payments, releasing equity or borrowing more money.
LMS’ research found a desire to reduce monthly payments motivated 26% of people who refinanced, and wanting to release equity or borrow more moved 27%.
Three-quarters of remortgagors chose a fixed rate deal so they could have certainty over payments, while 14% wanted to lock in a fixed rate because they were worried about the economic climate.
When asked to predict interest rates in the future, 38% said there would be increases within the next year and 49% suggested borrowing costs would rise more than a year in the future.
Almost a third – 32% – had no expectations for interest rates to go up.
