"The lead up to Christmas, low-rates and greater anticipation of a rate rise within the next year is the driving force behind the decision of many to remortgage now."
The research from LMS also shows that the number who expect rates to decrease within the next year fell from 9% in September to just 6% in October.
As a result, fixed five-year products more than doubled in popularity among those who switched their mortgage type: rising from just 8% to 19%. Average five-year fixed mortgage rates have fallen by 0.51% over the last year, outpacing two-year fixed mortgages which fell by 0.36% in the same period. Two-year fixed mortgages on the other hand, fell in popularity: down from 37% for a previous mortgage to 25% now.
There was also a substantial drop in demand for interest-only mortgages, from 15% who had this product before remortgaging to 5% who do now.
In October, 89% of remortgagors were able to lower their mortgage rate, up from 85% in September.
Three in five (60%) remortgagors were driven to remortgage because they had come to the end of their current deal, down from 62% in September suggesting homeowners are being slightly more proactive in October to take advantage of deals.
The average person who remortgaged to lower monthly payments was able to reduce them by £238 a month, equal to £2,856 a year, while 17% were able to lower their payment by £500 a month or more.
Almost three in five (59%) remortgagors consulted a broker in October, up from 52% in September, as people were less confident making decisions by themselves. 36% said they were confident enough to do this in October, down from 43% who said the same in September.
Andy Knee chief executive of LMS, commented: “The lead up to Christmas, low-rates and greater anticipation of a rate rise within the next year is the driving force behind the decision of many to remortgage now. Economic and political uncertainty spreading as a fall-out from the UK’s vote to leave the EU has affected people’s priorities. More people are looking for long-term security. They want to ensure they know exactly what they will owe and when, while the terms of Brexit are battled out.
“Record-low mortgage rates present homeowners with a fantastic opportunity to make monthly savings, something it is great to see so many taking advantage of. When you consider that the average adult owes £3,737 in unsecured lending, reducing mortgage payments could make a huge difference to paying off this debt.
“The plethora of mortgage products available can present a bit of a minefield for homeowners when choosing what to go for. Product numbers are up 4% just since September and 8% since the referendum. Consulting a broker is always advisable to help navigate the complex mortgage market and help get the best deal available to you, especially at a time when the market is in a state of flux and is hyper competitive.”
