Competition between lenders drove monthly remortgaging activity up by 9% in June, new research shows.
According to conveyancing service provider LMS, total remortgaging volume increased to 35,913 in June up from 32,600 in May.
On a yearly basis, the number of people remortgaging rose by 10% from 32,300 in June 2016.
Increased competition between lenders to attract remortgagers has intensified in recent months, resulting in lower rates.
Andy Knee, chief executive of LMS, said: “The remortgage market had an excellent month in June. More homeowners saved on their monthly repayments by remortgaging in June, compared to May.
“This was driven by the competition between lenders, many of whom have been offering mortgage products with rock bottom rates to entice remortgagors to switch.”
The average mortgage rate edged up slightly from 2.04% in May to 2.06% in June, while annually the average mortgage rate went down from 2.41% in 2016.
There was a massive rise in the number of remortgagers expecting a rate rise in June, with 47% expecting interest rates to increase in the next 12 months – up from 40% from May.
This was driven by speculation that the Bank of England’s Monetary Policy Committee would raise interest rates, with three members voting for an immediate interest rate hike in June’s meeting.
The speculation fuelled the continuing migration to fixed five-year deals, as over a third (36%) remortgaged onto a long-term deal in June, up from 8% who previously held this product type.
Knee said: “In June, the market was bracing itself for a rate rise – there was considerable speculation that the Monetary Policy Committee was going to increase rates in the foreseeable future. Remortgagers thought the tide was about to turn, with a greater number expecting a rate rise in the next twelve months.
“This fuelled the ongoing shift to fixed five-year deals, but half way through July, inflation fell to 2.6% from 2.9% the month before. It was the first rate drop in the annual rate since October. Economists had expected it to remain at 2.9% – a four year high.”
