"Homeowners weren’t solely looking for good value but also seeking long-term security, hence the increasing popularity of fixed five-year deals."
The value of remortgage transactions also rose month-on-month by 7% but suffered an annual fall of 15%, from £5.8 billion in January 2016 to £4.9 billion in January 2017.
January also witnessed the most frequent remortgaging since February 2009. Homeowners remortgaged every four years in January – four months faster than January 2016.
The frequency of remortgaging has improve substantially since January 2011, when the average term was six years and five months, but January 2017’s remortgaging rate of every four years is beaten by January 2009’s three years and eight months.
Fixed five-year deals rose in popularity at the start of the New Year. The percentage of remortgagors with a fixed five-year mortgage increased four-fold among those who switched their mortgage type, from 7% who had them previously to 29% who do now. As a result, fixed two-year mortgages suffered a fall from grace as five-year deals became the most popular product type.
The number of remortgagors consulting a broker also increased sharply at the turn of the year. Nearly seven-in-ten (69%) opted to remortgage via a broker – more than the 58% of remortgagors who did so in December.
Price remains the most important issue for homeowners when remortgaging. Over half (54%) of consumers selected their lender based on them having the cheapest mortgages or lowest interest rates. Meanwhile, recommendations from brokers and advisers remain the second most popular means for selecting a lender (27%).
Four in five (87%) remortgaged to take advantage of low rates, while nearly a quarter (22%) remortgaged to release equity in order to make home improvements.
Andy Knee, chief executive of LMS said: “When remortgaging in January, homeowners weren’t solely looking for good value but also seeking long-term security, hence the increasing popularity of fixed five-year deals. With inflation on the rise – rising to 1.8% in January, the highest since June 2014 – and both the Budget and Article 50 mere months away, remortgagors took advantage of January’s favourable conditions and record-low rates to guard against potential upsets in the near future. Almost half (45%) of remortgagors in January now expect interest rates to increase in the next year so homeowners would be smart to remortgage now – before it’s too late.
“The opportunity to secure lower mortgage rates, reduced monthly repayments and free up extra capital for a holiday or home improvements is continuing to drive both frequency and activity. What’s more, a greater number of homeowners sought out professional advice to help them take advantage of these benefits.”
