14 Oct 2019
Increased Number of Remortgages in August
Research conducted by LMS has shown that there was an increase in the number of remortgages conducted in August, when compared to figures from the previous month.
The company confirmed that there was a rise in the volume of remortgages from 52,869 in July to 53,141 in August. Loan amounts also saw an increase from £174,386 to £178,107. LMS CEO Nick Chadbourne says:
“With a significant peak in early redemption charge expiries on the horizon for October, we are expecting a steady ramp up in remortgage activity over the next few months. Volumes are already up month-on-month and this trend should continue in Q4 as remortgaging continues to outperform other areas of the market.”
With regard to total loan size, 44% of homeowners that remortgaged increased their loan amount, with an average increase of £20,091. Conversely, 21% reduced their loan amount through remortgaging, with an average decrease amount of £10,817. The remaining 35% maintained the same amount, with no change to the total loan.
In addition, the data showed that, while 5-year fixed rate products are still the most popular option for borrowers, there was a 2% overall drop in purchases of these. Whereas, it’s predicted that future studies will see a rise in purchases of 10-year fixed rate offerings. Chadbourne explained:
“Product purchasing levels remain consistent, but we do expect 10-year fixes to become increasingly popular in line with the current industry activity we are seeing. Borrowers are looking for certainty over their personal finances, and longer-term mortgage deals can provide this. There is a trade-off, however in some instances borrowers can expect to pay around 10% more per month for a 10-year fixed product compared to a five-year product.”
Despite reports that interest rates could fall, a large proportion of those surveyed by LMS believe they will rise. With regard to this, LMS state that economic uncertainty could cause lenders to increase their rates.