The LMS Remortgage Snapshot for the month revealed that the number of remortgages completed rose by 0.2 per cent while pipeline cases increased by eight per cent.
The cancellation rate also fell by 0.81 per cent to 6.79 per cent of remortgage business during the month.
While a five-year fix was still the most popular product choice and accounted for 46 per cent of completions, this was down on the 50 per cent share seen in May. Some 38 per cent of remortgagors opted for a two-year fix.
As for the reasoning behind going for a fixed rate deal, 69 per cent wanted security over their monthly payments and 21 per cent were worried about the future of the economy so wanted to lock a rate in now. Just eight per cent were persuaded to choose a fixed rate because of their broker.
The majority of respondents predict that rates will rise within the next year, as cited by 85.44 per cent of respondents.
When it came to why they remortgaged, 26 per cent of respondents said they wanted to lower their monthly payments, while 23 per cent wanted to release equity from their home.
Rising monthly payments
Some 69 per cent of people who remortgaged in June saw their monthly payments rise by an average of £292.64. For the 24 per cent whose payments decreased, this fell by £358.97 on average.
In June, 48 per cent of remortgagors increased their loan size, 38 per cent saw no change and 21 per cent reduced their loan.
Of those who upped their loan size, the average amount borrowed after remortgaging came to £19,403. People who reduced their loan had an average amount of £14,690 after refinancing.
Nick Chadbourne, CEO of LMS, said: “Since it’s the end of the second quarter, June always sees a spike in remortgage completions. Instructions also rose because borrowers are now confident that rates won’t be falling in the foreseeable future, so they are looking to secure a product now before they potentially increase along with the expected base rate trajectory.
“We will see this trend continue into H2 with over half a million borrowers nearing the end of their current mortgage term.”
He added: “The challenge is affordability – even with stress tests a thing of the past, banks will be wrestling with this, especially as the Consumer Duty comes into effect. Rising rates create challenges for banks looking to onboard new customers – products continue to change rapidly and many continue to opt for product transfers.
“However, shopping around with the help of a broker is critical in such an environment so borrowers would be well advised to do so to get the best possible deal.”
