Fixed rate deals are dominating the residential remortgage market with 96% of those who remortgaged in July doing so with this kind of product, new figures show.
Some 50% of borrowers took out a five year fixed rate product in July, the highest number recorded, up 4% month on month, according to the data from the latest LMS monthly remortgage snapshot report.
Overall there were 52,869 remortgages in July, down slightly from 53,516 in June, and the average monthly payment decrease for those who remortgaged in July was £209.79.
The data also shows that only 3% of borrowers chose a variable or tracker rate mortgage while two year fixed rate products are still the second most popular option, making 34% of purchases in July, down from 37% in June.
Some 42% increased their total loan size, 34% saw no change in their total loan size 24% reduced their total loan size while 44% increased their monthly remortgage repayments, 14% saw no change in their monthly remortgage repayments and 42% reduced their monthly remortgage repayments.
The report says that brokers are continuing to drive consumer behavior and this is reflected in 67% of borrowers opting to move lenders and remortgage on the advice of their broker, the same amount for the third month running.
Outside London and the South East, the highest average remortgage loan amount for July is in East Anglia, at £190,570. Outside London and the South East, the shortest previous mortgage length is in Yorkshire, at 52.08 months.
‘We’ve seen five year fixes grow in popularity for some time now. This month saw the highest number recorded, with half of borrowers choosing to fix for this length of term. In previous years, two year fixes were the norm, but now only a third of borrowers choose this length as they opt for longer terms,’ said Nick Chadbourne, LMS chief executive officer.
‘This is likely to be a reflection of wider market uncertainty and borrowers wanting to take control of their mortgage payments for a longer period of time. Similar to last month, it’s good to see brokers were a significant force behind this, with 67% of borrowers choosing to remortgage on the advice of their mortgage broker,’ he pointed out.