LMS’ Remortgage Snapshot for the month showed that 67 per cent of people went for a five-year fix while 21 per cent chose two-year fixes. Just four per cent of remortgagors went for a tracker rate, and two per cent opted for a 10-year fix.
The report indicated a slowdown in activity as there was a 49 per cent decline in instructions during the month.
There were also 17 per cent fewer remortgages completed and pipeline cases decreased by a tenth.
The desire for longer-term security was the main aim for people remortgaging last month, as 35 per cent cited this as their reasoning, making it the most popular response.
According to the report, 89 per cent of people expect mortgage rates to go up over the next year.
Some 43 per cent of borrowers increased their loan size, and following a refinance the average loan rose by £18,339. A further 36 per cent of people kept their loan amount while 21 per cent reduced it. For those who lowered their loan size, there was an average reduction of £14,333.
Some 72 per cent of remortgagors upped their monthly repayments by £240 on average. Seven per cent saw no change and for the 19 per cent who reduced their monthly payments, they saw an average decrease of £238.
Locking in rates
Nick Chadbourne, CEO of LMS, said: “While all metrics fell in December, this is somewhat unsurprising. The quieter month was both seasonal and down to the fact that the majority of borrowers were holding out to see what the new year would bring. Those who did remortgage were looking for longer-term security as is evident by over two thirds of them locking in five-year fixed rates.
“Moving forwards, we’re likely to see the market stabilise – the economy will likely steady in 2023 following the political volatility that dominated the last year. Mortgage rates are expected to reduce at the beginning of the year before settling back into previous dynamics against the base rate movements.”
He added: “Borrowers should therefore expect the first half of 2023 to bring the lowest prices for the foreseeable future and aim to lock these in while they still last.”
