Home owners in the UK are increasingly looking to remortgage as they fear that interest rates are more likely to rise than they were a year ago, new research has found.
There was a 14% increase in the number of remortgagers looking for lower monthly payments in December 2016, according to the analysis carried out by conveyancing service provider LMS.
Some 10,800 remortgagers said they believe that there will be a rates rise within the next 12 months compared to 6,500 in December 2015, the research found. It also found that 85% lowered their mortgage by remortgaging.
Of the 27,700 remortgages carried out in December 39% of remortgagers surveyed by LMS said they anticipate a rate rise within the next year, up from 25% in December 2015.
LMS says that the increased remortgage activity, also reported by the Council of Mortgage Lenders, has been driven by an increase in the number of people looking to lower their monthly outgoings, too.
The research also found that price was by far the most important factor when choosing a lender. More than half, 51%, of remortgagers said they chose their lender based on low cost deals while 25% chose a lender as recommended by their broker or financial advisor.
Just 8% chose a lender on the basis of their reputation, 6% on customer service, and 3% chose a lender recommended by a friend or family.
Keen to capitalise on potential savings, 56% expect to remortgage again within the next four years, whereas 17% plan to wait more than eight years.
LMS saw a lull in remortgaging activity from November to December, although the majority of the change was the result of a seasonal slowdown. In the last 10 years, the number remortgaging has always fallen between these two months.
‘Record low rates and anticipation of a rate rise in 2017 contributed heavily to the huge surge in activity. With inflation set to outstrip wage growth over the coming year, the opportunity to lower mortgage rates and reduce monthly outgoings will provide welcome relief for many families dreading the squeeze on household budgets, evidenced by price being the primary motivation when choosing a lender,’ said Andy Knee, chief executive of LMS.
‘It’s rewarding to see consumer awareness of the potential savings on offer is now so high. Savvy homeowners are already looking to remortgage again in the not too distant future. We anticipate a steady stream of remortgage activity throughout the first quarter of 2017,’ he explained.