There was a surge in remortgage activity in December, as homeowners looked to fix rates ahead of any further interest rate rises.
The number of remortgage deals increased by 41 per cent in December, when compared to the same month in 2016, according to conveyancing service provider LMS.
Not surprisingly demand for fixed-rate deals is rising. According to LMS the number of borrowers opting for a variable rate remortgage has fallen to a new low. Following the Base Rate rise in November, the variable rate remortgage deals shrank by 2 per cent in December.
These LMS figures show there were 39,943 remortgage deals in December, compared to 28,400 the year before.
LMS chief executive Nick Chadbourne says: “Rising interest rates on trackers and standard variable rate mortgages are driving remortgage activity, with borrowers highly motivated to remortgage.”
The Bank of England has suggested further rate rises are likely, which Chadbourne says could fuel further remortgage activity.
LMS says the markets are now pricing-in a base rate rise to occur as soon as May, and for there to be at least three rate increases over the next three years. The research conducted by LMS suggests 82 per cent of borrowers now expect an imminent rise.
The research also showed an increase in remortgage activity in the buy-to-let sector, with a slight increase in the popularity of two-year fixes.
These products accounted for just 20 per cent of buy-to-let mortgage in October 2017, rising to 23 per cent in both November and December.
LMS points out that there was a surge of activity in the buy-to-let market in the run up to April 2016, and the introduction of stamp duty surcharges on additional homes.
Chadbourne says: “At the end of the 2015 buy-to-let investors were racing against the clock to make sure they didn’t fall foul of the April 1 stamp duty deadline. It was criitcal purchasers finalised their transaction before being hit by this 3 per cent surcharge.
“With the popularity of lower cost two-year fixed rate mortgage this caused a spike in the market which is now working its way through the system as these deals come to an end.”