Five year products are the most popular for owners remortgaging
The vast majority, some 97%, of those who remortgaged in April did so with a fixed rate product, demonstrating their continued popularity in the remortgage market.
Five year fixed rate products were the most popular option, making up 48% of purchases, according to the latest data from the LMS monthly remortgage snapshot report.
This was followed by two year fixed rate products, which made up 34% of purchases. The reports says that this preference is unsurprising given consumer expectations regarding interest rate rises, with 61% of borrowers expecting bank rates to increase in the next year.
Some 65% of borrowers picked a remortgage product because it had been recommended by a broker, a steep rise from November 2018 when just 39% of borrowers chose a product due to broker recommendation.
LMS says that this sustained growth reflects the importance of brokers in the modern remortgage market. It was only in September 2016 when broker recommendation comprised just 22% of the reason why borrowers picked a remortgage product.
Indeed, with this rate of growth, brokers are very quickly becoming the go-to source of advice when borrowers review their current mortgage product.
Outside of London and the South East, the highest average remortgage loan amount is in East Anglia at £201,799. The shortest remortage length is found in East Anglia, an average of 50.59 months.
‘Borrowers are taking control of their monthly payments and locking into longer term fixed rate deals, with nearly half opting for a five year fixed rate product. This trend carries on from March, where 45% of borrowers selected this fixed term,’ said Nick Chadbourne, chief executive officer of LMS.
‘It’s also great to see that 65% of borrowers decided to remortgage using the guidance of a broker, highlighting the importance of advice in the remortgage process,’ he pointed out.
‘Another interesting observation is that 48% of borrowers chose to increase their loan size by taking advantage of the competitive rates available. This gives borrowers the flexibility to alter their monthly repayments and use the additional funding on home improvements, as we are seeing many choose to improve, not move,’ he added.