You are here: Home - News -

Remortgage market goes all-in on fixed rate deals

  • 19/12/2017
  • 0
Remortgage market goes all-in on fixed rate deals
Just five per cent of remortgage loans agreed in October were on a variable rate basis as the popularity of fixed-rate deals has soared over the last year.

Borrowers also appear to be opting for security by reducing rates and seeking to pay off their mortgages, rather than taking further equity out of their homes.

According to LMS, variable rate remortgages have fallen in popularity by 75% in a year.

The biggest drop was from November to December 2016, shortly after the Bank of England’s Base Rate cut, but this trend has continued all year to now see only one in 20 remortgages conducted being variable rate.

With expectations from the Bank of England that the Base Rate will continue to rise slowly over the next two years, this has seen the popularity of longer-term fixed rate deals surge.

Demand for five-year fixed deals made up a record 50% of all of October’s remortgage transactions – more than double the 19% seen in the previous year.


Equity withdrawn slips

Analysis by the conveyancing service provider found the number of remortgagors rose by 13% in October to 40,590, up from 35,900 in September, with a similar year-on-year rise from 35,300 in October 2016.

The value of remortgaging increased by 10% in October to £7.0bn, from £6.4bn in September, and up 13% from £6.2bn in October 2016.

However, the average amount of equity released by remortgaging fell 16% to £15,473 in October from £18,472 in September.

The average mortgage rate also fell to 1.99% in September – a continued decrease from 2.00% in August, and from 2.27% in September 2016.


Long-term trend

LMS chief executive Nick Chadbourne noted that the well-trailed rate rise was a likely source of increased numbers and demand for fixed-rate deals.

“This activity drove remortgaging volumes to peak, with the highest remortgage numbers since 2008,” he said.

“There will be interesting times ahead as the Bank of England hints at a long stretch of rises, I suspect many more consumers will opt to fix deals while rates are rock bottom and the market will continue to flourish for the foreseeable future.

“It’s hard to ignore the attractiveness of fixed-rate products at the moment. November’s rate rise ended ten years of falling rates and may well have fired the starting pistol on a decade of increases.”

He added that the one source of unpredictability looming on the horizon was Brexit, but the trend for fixed rates was well set.

“Lenders are tweaking their product portfolios to respond to changing consumer demand and remain competitive. With variable products unable to deliver the security consumers are seeking, this means fixed-rate products are set to stay at the top of the leader board for the foreseeable future,” he said.

There are 0 Comment(s)

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.


Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.


Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.


Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.
  • RT @robjupp: Great day yesterday for donations to @MortSleepOut. With Gift Aid, we are now close to £17,000. It would be great to get to £2…

Read previous post:
Rogue landlords and letting agents ‘have nowhere to hide’ – Sadiq Khan

Landlords and letting agents who exploit tenants will be named and shamed in a new online database covering London, Sadiq...