The LMS Monthly Remortgage Snapshot found just over a fifth of people, 22%, reduced their monthly bills after refinancing. 

For those who saw their payments go up, there was an average increase of £354.51 each month while those who reduced their outgoings saw a fall of £343.85 monthly. 

When remortgaging, some 43% of people increased their total loan size while 34% kept this the same. 

The five-year fixed rate product continued to be a popular choice among remortgagors, with 44% selecting this term. This was closely followed by a two-year fixed rate, which was chosen by 42% of people. 

Just 3% of borrowers went for a tracker mortgage and 1% chose a 10-year fix. 

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Driven by financial security and lower payments 

The largest share of remortgagors, 28%, had the main goal of reducing their monthly payments when refinancing. A quarter of people who remortgaged wanted to release equity or borrow more money and 19% were looking for security over their payments or wanted to secure a good deal now. 

For those who chose a fixed rate deal, 73% wanted the confidence in knowing how much they would be paying each month. Just 9% were driven to make this choice because of a broker and even a smaller proportion, 2%, were influenced by their lender. 

 

Remortgage instructions and pipeline falls 

LMS’ figures showed there was a 4% drop in remortgage instructions in April and the pipeline of cases fell by 3% month-on-month. 

The cancellation rate declined by 16% and there were 9% more remortgages completed during the month. 

Nick Chadbourne, CEO of LMS, said: “The key mortgage figures from UK Finance in 2023 showed an increase in product transfers of 17.1% compared to those in 2022 – it is clear that the product transfer trend has continued into 2024. Whilst not as significant as April, we are heading towards another early repayment charge (ERC) spike at the end of July. 

“Typically, this would mean an increase in remortgage instructions a few months prior; however, as is shown, we have experienced an atypical decrease in remortgage instructions month on month. In other news, for the first time since November 2023, a five-year fixed product has become the most popular choice amongst customers.” 

He added: “Our data also shows that 73% of customers’ product choices are motivated by security and wanting to know how much to pay per month. Both metrics indicate that a critical driver for borrowers is wanting certainty of mortgage payments over the longer term; although the Bank of England suggests rates will reduce, borrowers are opting for potentially higher payments over a longer term to ensure they have that certainty. 

“Affordability and rates remain key factors, but are we now looking at a shift in borrower behaviour? Are borrowers deciding to tie themselves to the same lender for multiple product periods? The data certainly suggests so.”