Remortgaging volumes went up in May, driven by record low rates and pre-election confidence, according to conveyancing service provider LMS.
The number of remortgage transactions increased by 8% month-on-month from 29,300 in April to 31,936 in May.
Three in five (58%) remortgagors said they expected no change in the average mortgage rate over the next twelve months – an increase from 53% who said the same in April.
LMS said that remortgaging volumes increased in May as borrowers were encouraged by the prospect of a massive majority in the election and the subsequent period of certainty and economic stability this would bring.
Borrowers were also encouraged by record low mortgage rates, as the average rate fell from 2.1% in March to 2.0% in April.
Andy Knee, chief executive of LMS, said: “Pollsters and the public had predicted a solid election result of a 100 plus seat majority for the Conservative Party and continuity at the heart of government. Pre-election confidence was the main driver behind the increase in the number of remortgage transactions.
“Remortgagors were so confident that the outcome of the snap election would provide stability that over half said they expected low rates to remain in place for at least the next year.”
However, in anticipation of a shock result some homeowners were more cautious.
Only 15% said their main reason for remortgaging was to reduce overall mortgage repayments, down from 17% in April.
This caution is also reflected as remortgagors took advantage of low rates and fixed for longer in May. Over a third (34%) remortgaged onto a fixed five year deal in May, up from one in 10 (8%) homeowners who previously had this product type before remortgaging.
The total value of remortgage transactions fell 1% between April and May from £5.1 billion to £5 billion.
Knee said: “Not everyone was confident that the election would give us a strong and stable government. While YouGov was a lone pollster predicting a hung parliament, equally, there was a small minority of homeowners who provisioned against a period of economic uncertainty, remortgaging to reduce the amount of debt held with their lender. They opted for caution ahead of risk and protected their most prized asset. Given the shock result, they look pretty smart.”
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