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Remortgagors expect interest rate increase within the next year, says LMS

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  • 16/11/2016
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Remortgagors expect interest rate increase within the next year, says LMS
Customers who remortgaged during October did so because they expect interest rates to rise in the next 12 months, according to recent figures.

A survey carried out by LMS found almost 23% of clients said the anticipation of an interest rate increase was the main factor that encouraged them to remortgage. This was an increase on the 14% who expected this when asked in September.

A further 6% of customers said they expected interest rates to drop within the year, highlighting a 3% decrease from September.

This sentiment has been credited as the driving force behind the increase in popularity of five-year fixed rate deals, rising from 8% in September to 19% in October, as customers opt for increased stability during recent market upheaval.

Subsequently, popularity in two-year fixed rate products dwindled, down from 37% for a previous mortgage to 25% now.

Andy Knee, chief executive of LMS, said the anticipation of a rate rise within the next year and the lead up to Christmas, against a backdrop of political and economic uncertainty was the reason people decided to remortgage in October.

The research also found 59% of remortgagors consulted a broker to advise them on what they should do, an increase from 52% recorded in September.

It found customers were less confident in making decisions by themselves in the month of October, with only 36% of people saying they felt confident enough to remortgage without a broker’s help, compared to 43% who said the same in September.

Knee added: “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 hyper competitive.”

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