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Nearly half of remortgagors increased loans in July – LMS

  • 23/08/2021
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Nearly half of remortgagors increased loans in July – LMS
Some 49 per cent of people remortgaging in July increased their loan size by an average of £16,389, data has shown.


Due to the larger loans, 43 per cent of people remortgaging saw their monthly repayments rise by an average of £261, according to the LMS remortgage snapshot. 

For those who decided to decrease their loans, 16 per cent chose to lessen their mortgage while 31 per cent saw no change. 

Some 41 per cent of borrowers saw their monthly repayments fall by £124 on average. 

Borrowers also opted for longer fixed rate periods as 45 per cent chose a five-year fixed product when refinancing, making it the most popular product for the month. 

Some 42 per cent went for a two-year fixed, while three per cent chose a 10-year fixed and two per cent opted for a tracker rate mortgage.

The majority of borrowers chose their preferred mortgage for security over their monthly payments, with 74 per cent of respondents citing this as their motivation. 

Releasing equity from their homes was the primary goal when remortgaging, 32 per cent of respondents said. Other goals included lowering monthly payments, as cited by 26 per cent and locking in a good deal and longer term security, as mentioned by 14 per cent of borrowers. 


Product transfer preference 

Instructions for remortgages rose 27 per cent in July and 31 per cent more were completed. However, Nick Chadbourne, chief executive officer of LMS, said this was lower than expected considering the amount of fixed rate maturities and put it down to people choosing a product transfer. 

He said: “Though this increase in instructions was expected given the large volume of early repayment charges (ERCs) expiring in July, it’s encouraging that nearly a third more borrowers shopped around for a cheaper deal when the time came to remortgage, benefitting from the rate wars gripping the market as lenders fight to offer the most attractive deal. 

“However, despite the healthy volumes, we would still expect activity to be higher, given that July is one of the biggest peaks in ERC expiries in the year. The data shows that many borrowers are in fact continuing to opt for a product transfer due to the competitive rates offered by their current lender. 

Chadbourne added: “Many offers will come with significant arrangement fees, which might not make these deals as appealing in the long term. Product transfers aren’t necessarily the best route either, even if a lower rate is on the table, as lenders often reach out months in advance and a better deal could be found if borrowers reviewed all available options closer to the time.  

“Advisers must therefore be proactive in reaching out to clients to make them aware of all the options available and provide the best support during this time.” 

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