Following a final quarter which reflected both the challenges of 2024 and encouraging signs of a more stable lending environment, intermediaries entered Q1 with plenty of cautious optimism about the remortgage market, whilst the purchase market was pushing hard to beat the impending stamp duty deadline.
January: A slow but steady start
The Bank of England maintained its base rate at 4.5% in January, down from its 2023 peak of 5.25%, but for most mortgage holders this brought little immediate relief. According to Barclays' Property Insights report, 72% of homeowners remained on fixed rate deals at the start of the year, and of the 14% who remortgaged over the past 12 months, 59% reported an average monthly repayment increase of £242.70, equating to nearly £2,913 annually.
The report also noted a 2% year-on-year rise in rent and mortgage spending, indicating ongoing affordability pressures. Meanwhile, 10% said their monthly costs were now lower after remortgaging, likely those who took out a shorter-term product during the higher interest rate environment.
Meanwhile, BoE figures showed that gross mortgage lending remained relatively flat in January at £21.3bn, while gross mortgage repayments declined to £16.3bn from a December figure of £18.5bn. However, the growth rate for net mortgage lending rose to 1.8%, up from 1.5% the previous month, continuing the upward trend observed since April 2024. Remortgage activity edged higher, with 32,900 approvals reported (up 2,200 month-on-month), after falling for the last two months, while house purchase approvals dipped slightly to 66,200.
February: Brokers anticipate a remortgage surge
While market activity slowed slightly in February, brokers were still forecasting a strong remortgage year. Research from Primis found that 40% of advisers were seeing a "noticeable increase" in customers switching lenders, and a striking 93% expected to see higher remortgage volumes over the coming year.
Despite this positive outlook, borrower behaviour showed signs of caution. Twenty7Tec reported that, across the residential market, there was a 2.28% monthly contraction in purchase mortgage searches and a 3.61% fall year-on-year. Remortgage queries fell by 5.64% month-on-month and 29.9% year-on-year. However, there was a small 0.44% uptick in searches for products for first-time buyers. In addition, buy-to-let remortgage searches were reported to be 6.13% lower on a monthly basis and down 24.12% when compared to the same period last year.
This trend underscores a divide between sentiment and execution, while the appetite to remortgage was certainly growing, many borrowers still appeared to be weighing up affordability concerns and lending options. Further supported by Twenty7Tec reporting that affordability searches have seen a 75% year-on-year increase.
March: A remortgage rebound
Momentum returned in March as remortgage instructions jumped by 23%, according to the LMS Remortgage Snapshot. While completions lagged, falling 20%, the pipeline of deals likely to complete in Q2 increased by 10%.
The Snapshot showed that the average monthly payment grew by £315.67, with 58% increasing their monthly remortgage repayments. Only 14% saw no change in their monthly repayments and 28% saw a drop in the monthly repayments. The average monthly repayment decline was estimated at £301.50, a sign that borrowers are still securing better terms despite broader economic headwinds.
Fixed rates remained dominant with 47% opting for a five-year fix, and 41% for a two-year term. The primary goal when remortgaging for 30% of those surveyed was to release equity on property and borrow more money. For 26%, it was to lower monthly repayments and 16% wanted security over monthly payments/to lock in a good deal now.
Additional data from Twenty7Tec backed up this remortgage surge, with monthly residential remortgages rising by 15.43%, while buy-to-let remortgage searches rose by 12.97%. This contrasts with the 2.4% month-on-month dip in overall purchase searches, reinforcing the view that we are entering a remortgage-led market.
With around 1.8 million borrowers expected to reach the end of their fixed rate deals this year, the intermediary market is primed to play a central role in helping clients navigate their options, refinance strategically, and mitigate payment shocks where possible.
So, let’s see what Q2 has in store for an increasingly buoyant remortgage market.
