LMS has reported that 52% of borrowers expect interest rates to rise within the next year, with 30% saying they think any changes are more than a year away.
With the next interest rate decision on the horizon, expectations may change in coming months, and we’ll have to wait and see what effect this will have on remortgage volumes.
95% of those who remortgaged in December did so with a fixed rate product. Just 2% of borrowers chose a variable or tracker rate mortgage, with these products off the table for the majority of remortgagers.
Purchases of five-year fixes grew from 43% to 46%, with two-year fixes falling to 39%. Five-year fixes remain the most popular products, and we are still yet to see 10-year fixes make a significant dent in the market with just 3% of borrowers choosing such a deal.
Nick Chadbourne, CEO, LMS, said: “Average loan amounts grew in December, as we saw an increase of 3% across the country with borrowers taking advantage of competitive rates to release additional equity. The North of England spearheaded loan increases, with growth of 10% in both the North West and Yorkshire. The North East, however, recorded a fall in loan size for the second month in succession, with loan sizes dropping by
8% in December.
“As it stands, the remortgage market is forecasted to be flat in 2020. A base rate reduction, however, paired with greater political certainty, could lead to the ‘Boris Bounce’ being felt within the remortgage market, as borrowers look to leverage the low interest rates through fixed products and releasing equity from their property.”