The LMS Remortgage Snapshot showed two-year fixed remortgages were the most popular products during the month followed by 34 per cent who chose a five-year fixed deal. No borrowers opted for a 10-year fix in December and 13 per cent selected a tracker product.
A third of people who remortgaged in December did so to reduce their monthly payments, which was the most popular response. Just over a fifth wanted to secure a rate and have security over their payments, while 18 per cent remortgaged to release equity and borrow more money.
In December, two-fifths of remortgagors increased their loan size and after refinancing, the borrowers’ loans increased by £18,121 on average. Some 35 per cent saw no change to their loan while a quarter decreased their loan size by £15,127 on average.
Around 78 per cent of people who refinanced in December saw their monthly mortgage payments rise and the average increase was £392. Some 15 per cent reduced their payments by an average of £292.
Pipeline for remortgages falls
While 49 per cent more remortgages were completed in December, pipeline cases fell by 12 per cent month-on-month. There were eight per cent fewer instructions. The cancellation rate of remortgages dropped by 7.61 per cent.
‘Shorter fixes still reign supreme’
Nick Chadbourne (pictured), CEO of LMS, said: “Remortgages are on the rise as predicted base rate cuts are on the horizon, but shorter fixes still reign supreme.
“As predicted in our November snapshot, falling swap rates have indeed meant that lenders started to be much more competitive on pricing in December. This naturally makes a full remortgage much more favourable to borrowers and as such we have seen 49 per cent more completions and the first fall in the cancellation rate in four months.”
Chadbourne added: “Two-year fixes remain the most popular product which is unsurprising and we expect this trend to continue, at least in the first half of 2024. The continued drop in swap rates is an indication that inflation will fall and so it’s widely predicted that the Bank of England will cut the base rate this year.
“Naturally, this will result in lower mortgage rates, so those needing to remortgage now will be unlikely to want to tie themselves in for more time than they have to. On top of that, house prices have fallen, albeit slowly, increasing affordability – all of these factors make remortgages more favourable to product transfers once more, so we expect the pipeline to pick up in January after the December contraction.”
