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Homeowners fix for longer to guarantee certainty


Interest Rates

Fewer homeowners remortgaged to lower their monthly payments in July, according to new research from LMS.

The conveyancing service provider found that just 15% remortgaged to lower their monthly payments in July, compared with 21% in June, while only 15% of homeowners remortgaged to increase the size of their overall loan in July, down from 19% in June.

LMS found that instead of remortgaging to lower monthly repayments or borrow extra money, homeowners appeared to be nervous about interest rates rising and remortgaged on to long-term deals at low rates.

Only 2% of remortgagors predicted interest rates to fall in the next year, while the remaining 98% expected rates to either stay the same or rise.

“Typically, over the last year, people were remortgaging to save on their monthly repayments or borrow additional funds,” said Andy Knee, chief executive of LMS.

“Instead, with rates low and expectations of a rate rise high, people are fixing for longer for added financial security.

“Borrowers are taking shelter from future rate rises and preparing for potentially turbulent times to come.

“The way people borrow is changing, there is a significant decline in interest-only and variable rate deals, and fixing for longer appears to be the top priority.

“It’s a flight to financial security.”

The average mortgage rate in July was 2.07%, lower than the 2.41% average in July 2016.

The number of people remortgaging their home in July increased by 12%, while the value of remortgage transactions increased by 3%.

LMS found the increase had been driven by improved affordability in the previous month, while the average annual repayment fell from £8,197 in May to £8,080 in June.

“Remortgagors benefited from a bumper month in July as affordability improved to a year-long high,” added Andy.  

“This propelled overall activity.

“With interest rates still low and lenders competing with one another to offer customers the best possible deal – there has never been a better time to remortgage in 2017.”





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