21% of remortgagors lowered their overall mortgage payments in June – up from 15% in May and the highest number since December 2016, according to conveyancing service provider, LMS.
84% lowered their mortgage rate in June, an increase from 82% in May.
The volume of homeowners remortgaging increased for the second month running. 35,913 remortgaged in June, a 9% increase from 32,600 in May. Year-on-year, the number of people remortgaging rose by 10% from 32,300 in June 2016.
LMS said the increase in total volume, the number lowering overall mortgage payments and mortgage rate is the result of competition between lenders to offer the lowest rates and attract remortgagors which has intensified in recent months, with several lenders now offering fixed two-year deal at 0.99%.
Andy Knee, chief executive of LMS, said: “The remortgage market had an excellent month in June. More homeowners saved on their monthly repayments by remortgaging in June, compared to May. This was driven by the intense competition between lenders, many of whom have been offering mortgage products with rock bottom rates to entice remortgagors to switch.
“As the market grows busier, remortgagors need to engage with law firms that are capable and have appropriate integrations with lenders and proven competency of processing. LMS is actively responding to increased levels of market activity by introducing new technology to support the process– such as LMS Casecheck to help drive efficiencies.”
The average mortgage rate increased slightly – to 2.06% – from 2.04% the month before. Annually, the average mortgage rate is way lower, down from 2.41% in 2016.
There was a large rise in the number of remortgagors expecting a rate rise in June. 47% of remortgagors stated interest rates would increase in the next 12 months, up from 40% in May and the highest number since February this year.
LMS said this was driven by speculation that the Bank of England’s Monetary Policy Committee would raise interest rates in the immediate future, with three members voting for an immediate hike in interest rates in June’s meeting.
The speculation fuelled the continuing migration to fixed five-year deals, as 36% remortgaged onto a long-term deal in June, up from 8% who previously held this product type.
Knee added: “In June, the market was bracing itself for a rate rise – there was considerable speculation that the Monetary Policy Committee was going to increase rates in the foreseeable future. Remortgagors thought the tide was about to turn, with a greater number expecting a rate rise in the next 12 months.
“This fuelled the ongoing shift to fixed five-year deals, but half way through July, inflation fell to 2.6% from 2.9% the month before. It was the first rate drop in the annual rate since October. Economists had expected it to remain at 2.9% – a four year high. That decline eases pressure on the Bank of England to raise interest rates and we’ll have to see how this plays out with remortgagors in July’s Remortgage Report.”