There was a £226 average monthly payment increase for those who remortgaged in July, according to the latest remortgage snapshot from LMS.
Of those remortgaging 54% of borrowers increased their loan size in July while 70% took out a 5-year fixed rate product, the most popular product during the month.
Some 35% said their main aim when remortgaging was to release equity in their property, the most popular response.
Nick Chadbourne (pictured), CEO of LMS, said: “Possible rise in two year fixes to come thanks to historic rate rise.
“While pipeline cases dropped in July, this isn’t likely to last for long. The next ERC expiry peak coupled with the historic rate rise from the Bank of England at the start of August will result in an increase in those looking to remortgage.
“As people grapple with economic uncertainty, the popularity of five year fixes has hugely increased in comparison to last year. In July 2021, less than half of homeowners remortgaged to a five year fixed rate. This has hugely increased to 70% this year.
“That said, we might see a shift in the type of products being taken up in August. The majority of those who locked into fixed rates in July plumbed for five year products to hedge against rising interest rates, but we might well see their popularity drop in August as people wait to see if rates will drop again towards the end of the year.
“Coping with this demand will be vital for the industry – borrowers, lenders and law firms alike – and we must collaborate to put appropriate solutions in place.”
