There was increased demand for longer-term fixed-rate deals last month, according to the data from conveyancing service provider LMS.
Demand for five-year fixes rose strongly among those remortgaging, and these loans accounted for almost half (47 per cent) of the this market in April. LMS says this is the highest proportion for six months.
This trend may be partly due to fears about future rate rises, as well as lenders pricing these longer-term deals more competitively.
According to LMS, the cost of the average five-year fixed (for remortgaging) only increased by 0.01 per cent, month-on-month in April – to 2.91 per cent.
In contrast, the average two-year fixed rate increased by 0.04 per cent to 2.43 per cent over the month. This is the highest average two-year rate since September 2016.
This LMS data also shows that the proportion of borrowers consulting an advisersor broker when remortgaging also hit a record high of 78 per cent in April, up from 72 per cent in March.
LMS chief executive Nick Chadbourne says: “The popularity of five-year fixed rate deals rebounded in April, having dipped in the first three months of the year.
“Lenders are eager to attract longer term business which has created a competitive landscape for customers. This has ensured that five-year average rates have remained relatively flat month-on-month.”
The data shows that 77 per cent of those remortgaging say they expect a base rate to rise this year – the lowest level in seven months. However, this is still significantly higher than last year, when just 46 per cent of those remortgaging believed there would be a rate rise in the year ahead.
Chadbourne says it is not surprising that there has been a surge in borrowers playing it safe by locking in longer term fixed-rates. “The direction of the economy is difficult to predict. Despite poor overall growth figures, unemployment and inflation are both falling – offering a very mixed, confusing economic landscape.”