The LMS Remortgage Snapshot revealed that a two-year fixed deal was the most popular choice for people refinancing and was selected by 45% of homeowners. 

By comparison, two-fifths chose a five-year fix, 3% went for a tracker mortgage and just 1% selected a 10-year fixed product. 

Some 45% of people who remortgaged in May increased their total loan size, while 34% made no change. People who increased their loan did so by an average of £20,869. 

Just over a fifth – 21% – of remortgagors reduced their loan size and did so by an average of £12,727. 

After refinancing, 70% of homeowners saw their monthly mortgage payments rise by an additional £342.03 on average. 

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For the 21% whose monthly mortgage payments shrank after refinancing, this was lowered by £339.44 on average each month. 

 

Desire for security when remortgaging 

For 71% of people who remortgaged in May, their motivation for choosing a fixed rate was a desire for certainty over their monthly mortgage payments. 

Some 16% said they were worried about the future of the economy, while 11% were recommended to choose this option by their mortgage broker. 

Of those who refinanced, 42% expect interest rates to rise over the next year, while 44% predict there will be no change. 

A fifth of people who remortgaged in May said they refinanced to have security over their payments and lock in a good deal now. A further 26% wanted to lower their monthly payments, while 24% wanted to release equity or borrow more money. 

 

A quiet month 

The cancellation rate for remortgages fell by 3% in May. 

Meanwhile, the pipeline of cases dropped by 11% and there was a 9% decline in instructions. 

Nick Chadbourne (pictured), CEO of LMS, said this signified a quiet few months in the remortgage space. 

He said: “The remortgage market follows the usual patterns, just like Gareth Southgate’s strategies at a major tournament. There is still a high level of product transfers as lenders aim to increase retention in a low-margin environment, and the summer has a drop in product maturities, which means the remortgage market will be very low until schools reopen.

“The Prime Minister surprised us all with the decision to have an election in July, while the Bank of England kept rates the same at the beginning of June, citing one metric as the reason, but I think we all know it’s because of the election. So, the sun is shining, the football is on, kids are about to finish school, and early repayment charges [ERCs] are low – all signs indicate a quiet few months in the remortgage world.”