"Pre-election confidence was the main driver behind the increase in the number of remortgage transactions."
The number of remortgage transactions increased by 8% month-on-month from 29,300 in April to 31,936 in May.
Borrowers were also encouraged by record low mortgage rates, as the average rate fell from 2.1% in March to 2.0% in April.
Some remortgagors, however, were less confident of the outcome. A minority of homeowners exercised caution and provisioned against the impact of a shock result as fewer remortgaged to reduce overall mortgage repayments, with only 15% citing this as their main reason for remortgaging, down from 17% in April.
This caution is also reflected as remortgagors took advantage of low rates and fixed for longer in May. Over a third (34%) remortgaged onto a fixed five year deal in May, up from one in ten (8%) homeowners who previously had this product type before remortgaging.
The total value of remortgage transactions fell 1% between April and May from £5.1 billion to £5 billion.
Andy Knee, chief executive of LMS, commented: “Pollsters and the public had predicted a solid election result of a 100+ seat majority for the Conservative Party and continuity at the heart of government. Pre-election confidence was the main driver behind the increase in the number of remortgage transactions. Remortgagors were so confident that the outcome of the snap election would provide stability that over half said they expected low rates to remain in place for at least the next year.
“Not everyone was confident that the election would give us a strong and stable government. While YouGov was a lone pollster predicting a hung parliament, equally, there was a small minority of homeowners who provisioned against a period of economic uncertainty, remortgaging to reduce the amount of debt held with their lender. They opted for caution ahead of risk and protected their most prized asset. Given the shock result, they look pretty smart.”
