"November saw a sizeable increase of 15.6% in the length of remortgagers’ previous deals as a wave of borrowers on five-year fixed rates switched products."
Purchases of five-year fixes fell from 46% to 43% and the increased popularity of two-year fixes remained. Despite this, five-year fixes remain the most popular products and 10-year fixes remained steady, rising from 3% to 4% despite competitive rates on these products.
55% of borrowers expect interest rates to rise within the next year, with 28% saying they think any changes are more than a year away. LMS says this explains the consistent activity in the remortgage market, which continues to underpin overall sector performance, with homeowners looking for certainty over their monthly repayments in an unpredictable economy.
Nick Chadbourne, CEO of LMS, commented: “November saw a sizeable increase of 15.6% in the length of remortgagers’ previous deals as a wave of borrowers on five-year fixed rates switched products. The first week of the month saw a peak in ERC expiries, and our data suggests that borrowers who previously held a five-year deal were the most active, with the average previous remortgage length sitting at 62.71 months. We expect December to follow the same pattern as 2018, with the potential for increased activity now the future of the economy is more certain.
“There was a notably higher proportion of borrowers increasing their loan sizes, as 42% took out additional equity in November compared with just 24% who reduced their loan size. This could suggest that there is increased confidence in the economy and overall market conditions. It’s also not surprising that borrowers are taking advantage of low interest rates, with borrowers seeing a £7.48 reduction in their monthly repayments on average."
