A report by LMS provides the remortgage activity for July 2022. The report shows average monthly payments went down, and of those who remortgaged the most popular reason given by respondents said the reason was to release equity into their property.
The report shows that 54% of borrowers increased their loan size in July. The key findings show that the average monthly payment for those who remortgaged in July went down to £226 from the previous month’s average which was £236.
Of those who remortgaged, 35% said their main aim was to release equity in their property. In addition to this, 70% of those who remortgaged took out a 5-year fixed rate product, which was the most popular choice in July. This was also an increase on the number of people who chose 5-year fixed rates from the previous month.
LMS commented on the findings that there might be a “possible rise in two year fixes to come thanks to historic rate rise”. LMS continued:
“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.”
Read the full remortgage snapshot here.
