Remortgagors push demand for five-year fixed deals to record high
Two in five (42%) of remortgagors opted for a five-year fixed deal in September, according to conveyancing service provider, LMS.
It said this sets a new record and is the seventh month in a row that the percentage of remortgagors opting for these products has grown.
LMS found that fear of an interest rate rise is behind the demand with 56% of September’s remortgagors expecting a rate hike. In the previous month, 45% of borrowers anticipated a rate rise. In September 2016, this number stood at just 14%.
With average mortgage rates at 2%, borrowers are locking in to fixed five-year deals and securing rates for the medium-term.
LMS added that the surge in demand has also been helped by the affordability of remortgaging with annual repayments falling to 16.4% of total income. This is at an all-time low.
Nick Chadbourne, chief executive of LMS, said: “Over the last month, remortgaging activity has skyrocketed. This activity has been dominated by the five-year fixed deal with 42% of September’s remortgagors opting for this type of mortgage.
“With 56% of September’s borrowers fearing an impeding rate rise – a significant increase from the 45% seen in August – anticipation of rate increases is driving this surge. With mortgage rates the second-lowest on record, and remortgaging more affordable than ever, borrowers are taking the initiative to lock into these low rates.”