The number of remortgagors expecting a rate increase in 2017 grew in October, according to conveyancing provider LMS, while the number predicting a rate cut dropped.
Almost a quarter (23 per cent) of remortgagors now expect a rate rise in the next year, the data found, up from 14 per cent who said the same in September. Meanwhile, the number who expect rates to decrease within the next year fell from 9 per cent in September to just 6 per cent in October.
Fixed five-year products more than doubled in popularity among those who switched their mortgage type: rising from just 8 per cent to 19 per cent. Average five-year fixed mortgage rates have fallen 0.51 per cent over the last year, outpacing two-year fixed mortgages which fell by 0.36 per cent in the same period, according to Bank of England figures.
However, two-year fixed mortgages fell in popularity: down from 37 per cent for a previous mortgage to 25 per cent now.
There was a substantial drop in demand for interest-only mortgages, from 15 per cent who had this product before remortgaging to 5 per cent who do now.
LMS, chief executive Andy Knee says: “The lead up to Christmas, low-rates and greater anticipation of a rate rise within the next year is the driving force behind the decision of many to remortgage now. Economic and political uncertainty spreading as a fall-out from the UK’s vote to leave the EU has affected people’s priorities. More people are looking for long-term security. They want to ensure they know exactly what they will owe and when, while the terms of Brexit are battled out.”
LMS says that in October, 89 per cent of remortgagors were able to lower their mortgage rate, up from 85 per cent in September as homeowners capitalised on record-low mortgage rates currently available in anticipation of a rise next year.
Almost a quarter of people remortgaging (23 per cent) said their primary reason for doing so was to lower their monthly mortgage payment. The average person who remortgaged for this reason was able to reduce their monthly payment by £238 a month, equal to £2,856 a year, while 17 per cent were able to lower their payment by £500 a month or more.