Around 23% of people that are currently remortgaging now expect a rate rise in the next year, according to LMS. This is up from just 14% who said the same in September 2016 – a more than 50% increase – amid growing speculation about the rate of inflation and a potential base rate rise. At the same time, the number who expect rates to decrease within the next year fell from 9% in September to just 6% in October 2016.
Fixed 5-year products more than doubled in popularity among those who switched their mortgage type: rising from just 8% to 19%. Average 5-year fixed mortgage rates have fallen 0.51% over the last year, outpacing 2-year fixed mortgages which fell by 0.36% in the same period. The shorter 2-year fixed mortgage has also fallen in popularity - down from 37% for a previous mortgage to 25% now.
There was a substantial drop in demand for interest-only mortgages, from 15% who had this product before remortgaging to 5% who do now.
Andy Knee chief executive at LMS, said: “Low-rates and greater anticipation of a rate rise within the next year is the driving force behind the decision of many to remortgage now. More people are looking for long-term security. They want to ensure they know exactly what they will owe and when, while the terms of Brexit are battled out.”