Homeowners are taking advantage of the remortgage opportunities being offered by lenders. According to LMS, the volume of remortgages increased by 41% year on year in December 2017, from 28,400 to 39,943. There was also an increase in the month to month volume from November to December likely due to the Bank of England’s Monetary Policy Committee (MPC) pushing the standard interest rate from 0.25% to 0.50%.

Experts are suggesting the next increase could come as early as May.

LMS research revealed that 82% of borrowers expect for there to be an increase, which is why there has been a strong demand for fixed rate remortgages. Five year fixed rate remortgages made up 46% of remortgages in December 2017, which is twice the amount recorded in December 2019 at 23%.

Nick Chadbourne, the Chief Executive of LMS, remarked, “We are still in a 'settling in' period,  borrowers and lenders have yet to fully acclimatize to the current situation. But rising interest rates on trackers and standard variable rate mortgages are driving remortgage activity with borrowers highly motivated to remortgage.

“With the base rate having risen for the first time in 10 years, borrowers have started looking for greater security. Product requirements have therefore had to change, with lenders adapting to a shift in the market and the dwindling popularity of variable rate products. While variable rate products are versatile and provide a level of flexibility that might have appealed to borrowers when the base rate was falling, in the current climate of rising rates, the security offered by fixed-rate products is the natural choice for many now. Borrowers have been primed to expect a higher cost of borrowing and they are opting to secure their position and eliminate risk where possible.

“At the end of 2015, buy-to-let investors were racing against the clock to make sure they didn’t fall foul of the 1st April Stamp Duty deadline, it was critical purchasers finalized their transactions before being hit by the 3% surcharge. With the popularity of two-year fixed rate mortgages with landlords, that caused a spike in the market which is now working its way through the system as these deals come to an end. Even with the new interest rate environment driving the popularity of five-year rather than two-year-fixes, we’ve still seen an increase in their popularity recently.”