LMS has reported that 42% of remortgagors opted for a five-year fixed rate mortgage in September.
This is the seventh month in a row that the percentage of remortgagors fixing for five years has grown, up significantly from the 9% of remortgagors who had previously opted for this type of mortgage.
Interest rate fears are causing the surge in demand, with 56% of September’s remortgagors anticipating a rate rise. This is a considerable increase from last month when just 45% of borrowers said they were expecting an imminent rate rise, and is in stark contrast to September 2016, when this number was only 14%.
With average mortgage rates at 2.0%, borrowers are capitalising on this benign lending environment by locking in to fixed five-year deals and securing rates for the medium-term.
This surge in demand has been facilitated by the attractive affordability of remortgaging, with annual repayments falling to 16.4% of total income – an all-time low. In September alone, the number of remortgagors increased by 13% to 41,573 from August’s 36,700, while the value of remortgaging increased by 2% to £66.66bn over the same timeframe.
Nick Chadbourne,, chief executive of LMS, said: “Over the last month, remort gaging activity has skyrocketed. This activity has been dominated by the five-year fixed deal with 42% of September’s remortgagors opting for this type of mortgage.
“With 56% of September’s borrowers fearing an impeding rate rise – a significant increase from the 45% seen in August – anticipation of rate increases is driving this surge.
“With mortgage rates the second lowest on record, and remortgaging more affordable than ever, borrowers are taking the initiative to lock into these low rates.”