There were 14% fewer remortgages completed in August compared to the previous month, but of those who did, nearly half chose a five-year fix, a conveyancing firm’s data found.
The LMS Remortgage Snapshot for August showed 45% of people who remortgaged during the month selected a five-year fixed deal, making it the most popular choice for borrowers.
A slightly smaller share of people (41%) chose a two-year fix – the second-most favoured option.
Just 6% of borrowers went for a three-year fix, and only 4% chose a tracker deal. Some 1% of remortgagors selected a 10-year fix, while a further 3% went for an alternative deal.
The vast majority – 74% – of remortgagors said they chose a fixed rate deal because they wanted certainty with their repayments.
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Larger post-remortgage loans
Half of the people who remortgaged in August increased their loan size by an average of £19,913. Of the 21% who reduced their loan size, this decreased by £13,594 on average.
After remortgaging, 67% of borrowers saw their monthly payments go up, with a typical increase of £329.81.
A quarter of people refinancing saw their monthly payments decline by an average of £384.79.
Some 27% of people who remortgaged in August did so with the intention of releasing equity from their home or borrowing more money. Similarly, 27% aimed to lower their monthly payments.
Wanting security over mortgage payments or to lock in a good deal motivated 16% of remortgagors.
Many will still be hit by repayment shock
The pipeline of remortgage cases rose by 1% in August, while the level of instructions fell by 3%. There was also a 3% rise in the number of remortgages cancelled.
Nick Chadbourne (pictured), CEO of LMS, said: “August trends follow months with higher monthly outgoings and a spread between mortgage terms. What remains a constant is the desire for customers to have security over their monthly outgoings. As we’re nearing autumn, I was triggered to look at the same point in 2022, just before Liz Truss introduced the mini Budget.
“At that time, almost 70% of homeowners were taking five-year products, and loan sizes were increasing by around half of what we see today. Given that millions of borrowers remain at the low rates from pre-2022, many are still to be hit by the rate shock of remortgaging.”
