According to LMS’ monthly remortgage snapshot for May, a quarter opted for a two-year fixed rate, while five per cent choose a 10-year fixed rate.
Nearly 64 per cent said that they wanted security over their monthly payments, and over a quarter were worried about the economy and wanted to lock in a fixed rate. Another quarter added that they were worried about job security.
Just over a quarter, 26 per cent, said that their primary goal when remortgaging was to lower monthly repayments, followed by releasing equity and to lock in a good deal now at a quarter respectively.
Around 44 per cent of remortgage clients increased their loan size in May, with the average loan increase post remortgage pegged at £20,707. The average loan decrease post-remortgage came to £11,882.
Of the the 43 per cent who reduced their monthly mortgage payment the average decrease was £181.
Around 44 per cent said they had increased their monthly remortgage payments, with average monthly repayment pegged at £207.
Instructions increased by 73 per cent during the month although the number of completed remortgage products fell 2 per cent during the month.
The cancellation rate rose by nearly one per cent on April’s figure to 5.6 per cent.
The average remortgage loan amount in London and the South East was £308,432 while the average for the rest of the UK stood at £140,564. This meant remortgage loan amounts were 119 per cent higher in London and the South East than the rest of the UK.
The longest previous mortgage length was found in the North East at 80.65 months, or 6.72 years, and the shortest was in the South East at 70.13 months, or 5.84 years. This meant the longest previous mortgage term 15 per cent longer than the shortest.
Nick Chadbourne (pictured), chief executive of LMS said consumers were needing competitive longer-term fixed rate products.
“The figures show that there has been a substantial increase in instructions indicating higher consumer demand and increased market activity, as predicted last month.
“Consumers are looking to make savings in light of the cost of living crisis and further base rate rises, trying to lock in competitive, longer-term fixed rate products ahead of the next early repayment charge (ERC) date at the end of June.”
He added that this was partly why the five-year fixed rate was the most popular product, adding that the number of people taking them out was 10 per cent up on April.
“This is because, in addition to offering longer-term financial security, many fixed rate products for five or more years are now cheaper than two-year fixed rate products,” he explained.
Chadbourne continued that lenders would “try to remain competitive” and might consider the possibility of widening their range to include seven or 10-year fixed rates.
“That said, uncertain economic conditions make affordability much more of a prominent factor. We should expect lenders to become more cautious when it comes to their risk profile, and rightly so,” he said.