The number of remortgagors fearing a rate rise has increased dramatically over the last 12 months, LMS has stated.
In December 2015, 6,500 remortgagors said they anticipated an interest rate rise within the next year. LMS’ research suggests this rose to 10,800 in December 2016, an increase of 66%.
There were 27,700 remortgages carried out in December 2016 and 39% of remortgagors surveyed by LMS said they anticipate a rate rise within the next year – approximately 10,800 people. In December 2015, when remortgages stood at just 26,000, just 25% of remortgagors said the same – approximately 6,500 people.
Adding to fears over a surge in rates, LMS says the increased remortgage activity – also reported by the CML – has been driven by an increase in the number of people looking to lower their monthly outgoings, too.
In December 2016, 23.3% of remortgagors told LMS they were looking to reduce their monthly outgoings by remortgaging – approximately 6,500 people given the size of the market. In December 2015, just 21.7% of remortgagors said the same (approximately 5,600 people) – a 14% rise over the course of the year.
Price was by far the most important factor when choosing a lender. 51% of remortgagors said they chose their lender based on low cost deals, more than twice as many as the second most important factor – customer service (25%).
Keen to capitalise on potential savings, 56% expect to remortgage again within the next four years, whereas 17% plan to wait more than eight years.
LMS saw a lull in remortgaging activity from November to December, although the majority of the change was the result of a seasonal slowdown: in the last ten years, the number remortgaging has always fallen between these two months.
Andy Knee, chief executive of LMS, said: “2016 was a great year for remortgaging. There were drivers on both the supply and demand side. Record low rates and anticipation of a rate rise in 2017 contributed heavily to the huge surge in activity. With inflation set to outstrip wage growth over the coming year, the opportunity to lower mortgage rates and reduce monthly outgoings will provide welcome relief for many families dreading the squeeze on household budgets – evidenced by price being the primary motivation when choosing a lender.
“It’s rewarding to see consumer awareness of the potential savings on offer is now so high. Savvy homeowners are already looking to remortgage again in the not-too-distant future. We anticipate a steady stream of remortgage activity throughout the first quarter of 2017. The only clouds on this otherwise blissfully calm sunny horizon loom in the form of Article 50. When Theresa May triggers it, the market can expect some choppy waters and a little less plain sailing.”