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Equity withdrawn slips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.
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.