Remortgaging: popularity of fixed rates soar : The remortgage market is being buoyed by consumers’ search for certainty and security, according to conveyancing service provider LMS.
October’s remortgage market was the second busiest since the financial crisis, with 40,590 remortgage transactions and over £7 billion lent. The trend has been driven by borrowers’ priorities shifting as expectations of an increase in the Bank rate have grown, transforming the landscape of the remortgage market. With hikes predicted to continue for the next decade, consumers’ focus is centring, more and more, on security – on lockingin low rates while the opportunity still exists.
This has seen the popularity of longer-term fixed rate deals surge with demand for five-year fixed deals making up a record 50% of all of October’s remortgage transactions. This is over double the 19% seen in the previous year. But, as priorities have shifted, so demand for variable rate deals has declined. In October, from last year’s 19% market share, demand for variable products had fallen to just 5%.
This activity coupled with a change in consumer demand means lenders are having to update product offerings and increase their levels of service.
Nick Chadbourne, chief executive of LMS, commented: “Lenders are tweaking their product portfolios to respond to changing consumer demand and remain competitive. With variable products unable to deliver the security consumers are seeking, this means fixed-rate products are set to stay at the top of the leader board.” “Consumers were correct – borrowers identified that a rate rise was likely, and many smartly capitalised on the situation. This activity drove remortgaging volumes to peak, with the highest remortgage numbers since 2008.
“Given how easy conveyancing and remortgaging is now – thanks chiefly to technological innovation in the sector – and with these hikes set to continue – it is difficult to imagine that this surge in activity will disappear any time soon. “There will be interesting times ahead as the Bank of England hint at a long stretch of rises, I suspect many more consumers will opt to fix deals while rates are rock bottom and the market will continue to flourish for the foreseeable future.”
The research chimes with recent news from the Bank of England’s which highlights that the number of remortgage transactions roses to 51,593, the highest it has been since October 2008.
Unattributed – Source