Some 48% of purchases were made up by 5-year fixes, followed by 2-year fixed rate products, which made up 34% of purchases.
The majority (97%) of those who remortgaged in April did so with a fixed rate product, with 5-year fixes being the most popular option, LMS’s Monthly Remortgage Snapshot has found.
Some 48% of purchases were made up by 5-year fixes, followed by 2-year fixed rate products, which made up 34% of purchases. This preference is unsurprising given consumer expectations regarding interest rate rises, with 61% of borrowers expecting bank rates to increase in the next year.
Nick Chadbourne, chief executive, LMS, said: “Borrowers are taking control of their monthly payments and locking into longer term fixed rate deals, with nearly half opting for a five-year fixed rate product.
“This trend carries on from March, where 45% of borrowers selected this fixed term. It’s also great to see that 65% of borrowers decided to remortgage using the guidance of a broker, highlighting the importance of advice in the remortgage process.
“Another interesting observation is that 48% of borrowers chose to increase their loan size by taking advantage of the competitive rates available.
“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’.”
Some 65% of borrowers picked a remortgage product because it had been recommended by a broker, a huge rise from November 2018 when just 39% of borrowers chose a product due to broker recommendation.
This sustained growth reflects the importance of brokers in the modern remortgage market. It was only in September 2016 when broker recommendation comprised just 22% of the reason why borrowers picked a remortgage product.
With this rate of growth, brokers are very quickly becoming the go-to source of advice when borrowers review their current mortgage product.
The average monthly payment decrease for those who remortgaged in April was £206. The volume of remortgages in April was £52,560, down from 52,762 in March and the average loan amount was down from £172,390 in March to £168,600 in April.
Outside of London and the South East, the highest average remortgage loan amount is in East Anglia at £201,799.
The shortest remortage length is found in East Anglia – an average of 50.59 months.
In terms of monthly loan repayments 45% of borrowers increased their monthly remortgage repayments, 10% saw no change in their monthly remortgage repayments and 46% reduced their monthly remortgage repayments.
Furthermore, in terms of remortgage loan repayments 48% increased their total loan size, 30% saw no change in their total loan size and 22% reduced their total loan size.
