Sales of variable rate remortgages have fallen drastically in the past year, with homeowners looking for certainty over their mortgage repayments.
According to figures from LMS, the conveyancing outsourcer, sales of variable remortgages have declined by 75% over the past 12 months, despite an overall increase in remortgage sales.
This monthly remortgage report refers to sales in October, when speculation about a rate rise increased significantly. The Bank of England subsequently raised the Base Rate by 0.25% in early November.
In October variable rate remortgaging accounted for just 5% of the remortgage market, down from 19% the year before.
In contrast, longer-term fixes became more popular, accounting for 50% of all remortgages in October.
The search for security also led to more people looking to refinance. There were 40,590 remortgage transaction during the month, and over £7 billion lent.
According to LMS this made October 2017 the second busiest month since the financial crisis. Seasonally adjusted, the number of transactions rose to 51,583, the highest monthly figure since October 2008.
LMS chief executive Nick Chadbourne said:
“Borrowers identified that a rate rise was likely, and many smartly capitalised on this situation. The activity drove remortgage volumes to a peak.
“There will be interesting times ahead as the Bank of England has hinted at a long stretch of rate rises. I suspect many more consumers will opt to fix deals while rates are rock bottom and the market will continue to flourish for the foreseeable future.”
ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.