23% of remortgagors now expect a rate rise in the next year, according to LMS.
This is up from 14% who said the same in September – a 50% increase – amid growing speculation about the rate of inflation and a potential rate rise in the Bank Rate. At the same time, the number who expect rates to decrease within the next year fell from 9% in September to just 6% in October.
Fixed five-year products more than doubled in popularity among those who switched their mortgage type: rising from just 8% to 19%. Average five-year fixed mortgage rates have fallen 0.51% over the last year, outpacing two-year fixed mortgages which fell by 0.36% in the same period. Two-year fixed mortgages on the other hand, fell in popularity: down from 37% for a previous mortgage to 25% now.
LMS said there was a substantial drop in demand for interest-only mortgages, from 15% who had this product before remortgaging to 5% who do now.
Andy Knee, chief executive of LMS, said: “The lead up to Christmas, low-rates and greater anticipation of a rate rise within the next year is the driving force behind the decision of many to remortgage now. Economic and political uncertainty spreading as a fall-out from the UK’s vote to leave the EU has affected people’s priorities. More people are looking for long-term security. They want to ensure they know exactly what they will owe and when, while the terms of Brexit are battled out.”
Last month, 89% of remortgagors were able to lower their mortgage rate. The rate rose from 85% in September as homeowners capitalised on record-low mortgage rates currently available in anticipation of a rise next year.
60% of remortgagors were driven to remortgage because they had come to the end of their current deal, down from 62% in September suggesting homeowners are being slightly more proactive in October to take advantage of deals, LMS said.
23% of people remortgaging said their primary reason for doing so was to lower their monthly mortgage payment. The average person who remortgaged for this reason was able to reduce their monthly payment by £238 a month, equal to £2,856 a year, while 17% were able to lower their payment by £500 a month or more.
The number of people remortgaging to pay off debts rose from 9% in September to 14% in October as people prepare for the cost of Christmas.
Knee added: “In the run-up to Christmas in particular, when it is usual for outgoings to increase as families prepare for the festivities we can see cost conscious families paying off other debts in advance to avoid being caught unaware in, or after, the holiday season.
“Record-low mortgage rates present homeowners with a fantastic opportunity to make monthly savings, something it is great to see so many taking advantage of. When you consider that the average adult owes £3,737 in unsecured lending, reducing mortgage payments could make a huge difference to paying off this debt.”
59% of remortgagors consulted a broker in October, up from 52% in September driven by a lack of confidence in their ability to make the best possible savings.
People were less confident making decisions by themselves in October compared to the previous month: 36% said they were confident enough to do this in October, down from 43% who said the same in September.
Knee said: “The plethora of mortgage products available can present a bit of a minefield for homeowners when choosing what to go for. Product numbers are up 4% just since September and 8% since the referendum. Consulting a broker is always advisable to help navigate the complex mortgage market and help get the best deal available to you, especially at a time when the market is in a state of flux and is hyper competitive.”