Record low rates are to prompt almost two thirds of those who remortgaged in September to do so again in the next four years, according to research from LMS.
The conveyancing panel management specialists found that, in September, 85 per cent of those remortgaging were able to lower their rates. In total, 64 per cent of those who remortgaged in the month planned to do so again in the next four years, LMS found, while 12 per cent plan to wait more than eight years to remortgage again.
However, 62 per cent of remortgagors in September only remortgaged when they did because they had come to the end of their current deal.
The research says that, despite commentary to the contrary, 14 per cent of those remortgaging believe interest rates will increase in the next year.
Less than one in ten (9 per cent) believe they will be lowered again within the next year.
LMS chief executive Andy Knee says: “Record-low mortgage rates after the cut to the base interest rate make this a great time to remortgage. Mortgage interest rates were already falling but this cut may have been the catalyst to encourage more people to remortgage – August had the highest number of remortgages for seven years, after the base rate was cut.”
The LMS survey also examined customer preference relating to product choice and found that in September, 46 per cent of remortgagors changed the type of their mortgage product to suit their current financial situation and expectations.
Of those who changed their mortgage product, almost two in five (38 per cent) had a two-year fixed mortgage for their previous term, while 26 per cent opted for this type of product in their new mortgage. In contrast, just 8 per cent of remortgagors had a five-year fixed mortgage before remortgaging, but this number has since climbed to 22 per cent as average rates for this type of product have fallen.
However, five year fixes remain more expensive than two year fixes, which LMS says supports “anecdotal evidence that, in the current environment of political and economic uncertainty, people are looking for longer-term security even if this involves slightly higher costs in the short-term.”