Recent research has found that demand for five-year fixed rate remortgages has dropped to represent the smallest portion of the market since July last year.
According to data from LMS, February saw demand fall to just over a third (37%) of the remortgage market, down from 45% in January.
The fall has largely been attributed to the shift in demand, with consumers choosing two-year fixed rate deals following the interest rate rise last year. Borrower demand for these deals was up 2% in February to 24%, a seven month high.
Commenting on the figures was chief executive of LMS, Nick Chadbourne. He said: “Consumer interest in fixed five-year deals has dipped as many borrowers opt for the lower rates on offer from two-year products. This is a significant shift from what we’ve seen in recent months, suggesting the popularity of five-year deals may have peaked.
“The move towards two-year deals is likely a result of borrowers offsetting the cost of November’s base rate increase by switching to a shorter fixed rate period when they remortgage. Few borrowers will want to risk a variable rate mortgage with potential increases to the base rate likely to be on the way later this year, but with incomes squeezed, demand for longer term fixed deals has slipped.”
