Remortgage activity has fallen for a consecutive month in the run up to Christmas but there are positive signs for an uplift in Quarter 1 of 2024, according to the latest LMS Monthly Remortgage Snapshot.
In a sign that borrowers are keen to fix their payments and take advantage of falling mortgage rates, 36% of those who remortgaged took out a 5-year fixed rate product; the average 5-year fixed mortgage rate coming down to 5.07%, from 5.30% a year ago according to Rightmove’s weekly mortgage tracker.
One indicator of a return of confidence to the market is the statistic that nearly 1 in 2 borrowers increased their loan size (43%) which, alongside higher interest rates, pushed the average increase in monthly repayments up to £421.79.
Commenting on the report LMS CEO Nick Chadbourne, says
“Remo pipeline drops as expected as economic circumstances increase product transfers. Although the contraction of the overall pipeline was not as significant this month compared to October, we are still seeing a drop in remortgage activity. While we saw a marginal increase in instructions, cases did not progress through the journey: 29% fewer remortgages were completed in November and cancellations increased for the third consecutive month.
“Instead, product transfers have been particularly attractive for borrowers looking for a comparable product, which has only exacerbated what is always a time of reduced activity over the festive period.
“All of that said, swap rates are dropping which may be a sign of a further drop in inflation on the horizon. Lenders are being more competitive with pricing as they start to look towards 2024, especially as house prices are also falling. This is giving rise to additional borrowing requirements or changes in terms, or both, which naturally are more conducive to a full remortgage so we expect the pipeline to pick up at the start of the new year.”
The average remortgage loan amount in London was £341,684, while the average for the rest of the UK stood at £201,440, making remortgage loan amounts 51.64% higher in London than in the rest of the UK.
The longest previous mortgage length was found in in the West Midlands at 78.93 months (6.57 years), while the shortest was in Wales at 64.71 months (5.39 years), making the longest previous mortgage term 21.34% longer than the shortest.
