Demand for five-year fixed rate remortgages grows to almost half of market
The latest data has revealed that demand for five-year fixed rate remortgages has hit a six month high in terms of total remortgage market share.
According to data from LMS, demand reached 47% in April, up from March’s proportion of 36%. Demand is also up 13% year-on-year, when market share was recorded at 34%.
The uplift has been attributed to the rise in borrowers making the leap to longer-term deals as more competitive offers appear on the market. Month-on-month, April saw the average rate for five-year fixed rate remortgages grow by just 0.01% to 2.91% – significantly lower than the 0.04% monthly rise which the two-year fixed rate saw.
Nick Chadbourne, chief executive of LMS, said: “The popularity of five-year fixed rate deals rebounded in April, having dipped in the first three months of the year. Lenders are eager to attract longer-term business which has created a competitive landscape for customers. This has ensured five-year average rates have remained relatively flat month-on-month. As more borrowers seek independent advice when remortgaging, the market is reacting quickly to the shifts in headline rates.
“Five-year fixed rate remortgages will always be popular when borrowers are seeking financial security. Many consumers are now opting for these deals to ensure they have certainty and stability through the potential economic and political upheaval of the next few years.”
April also saw the average remortgage loan hit a record high, growing to £175,000 – a 9% uplift month-on-month.
Nick continued: “The average loan size jumped to a new peak in April as consumers take out larger remortgages. With comparatively slow house price growth this month, LTV ratios have also increased. To balance the higher LTV ratios, the average term length has increased to the highest level in 21 months.”