According to LMS’ Remortgage Snapshot for August, remortgage instructions decreased by 8% compared to the prior month, while remortgage completions fell 28% over the same period.
The remortgage cancellation rate rose by 6% on the previous month and the pipeline decreased by 1% on the prior month.
Around 45% of borrowers said they increased their total loan size, while 36% saw no change in their total loan size and 19% cut their total loan size.
The report noted that the average monthly payment increase for those who remortgaged in August was £354.21, while the average monthly repayment decrease came to £211.47.
The average loan increase post-remortgage came to £22,615.38, while the average loan decrease post-remortgage stood at £11,327.79.
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Looking at product purchases, around 47% of borrowers opted for a two-year fixed rate and 41% chose a five-year fixed rate.
Only 4% chose a deal in the ‘other’ category, while 3% selected a three-year fixed rate or tracker and 1% opted for a 10-year fixed rate.
When asked what their primary goal when remortgaging was, 30% pointed to releasing equity on property or to borrow more money, while 26% pointed to lower monthly payments and 16% said security over monthly payments or to lock in a good deal now.
More than three-quarters of those said they chose a fixed rate as they wanted security over payments, 10% said their broker recommended it and 9% said they were worried about the economic climate and wanted to lock in a deal.
Nick Chadbourne, LMS’ CEO, said: “August saw the usual seasonal dip in remortgage activity, but the market remains resilient. The popularity of two-year fixed rate products suggests borrowers are hedging their bets, looking for short-term protection while keeping options open should rates ease over the next couple of years. With households now back into a routine after summer, we expect activity to build as the year progresses, echoing the rebound we saw this time last year.”
