Remortgagors turn to five-year deals
April saw a sharp jump in demand for five-year fixed rate remortgage deals, with these long-term products now accounting for just shy of half the market.
Around 47% of remortgages are now over a five-year fixed term, the highest level in six months. This represents a significant increase from March, when five-year deals accounted for little more than a third (36%) of the remortgage market.
Demand for five-year deals has also jumped on an annual basis, from 34% last April.
The latest remortgage report from property service giant, LMS, suggested the growth in popularity is a result of keen pricing, with rates on five-year products remaining largely flat while two-year deals have seen costs rise.
Nick Chadbourne, chief executive of LMS, said: “Five-year fixed rate remortgages will always be popular when borrowers are seeking financial security. Many consumers are now opting for these deals to ensure they have certainty and stability through the potential economic and political upheaval of the next few years.”
The hunt for financial security was in part prompted by expectations of a base rate rise which did not materialise. Perhaps as a result, the proportion of remortgagors who expect a rise this year has dropped to 77%, the lowest level seen in seven months.
Nevertheless, this represents a sharp increase from the number of borrowers expecting a rate rise within 12 months from this time last year, when just 46% of respondents forecast a rise.
The report also found that the average remortgage amount has hit a record high of £175,000. This is up 9% from March and represents a 10% rise year-on-year.