Remortgage completions rose by 49 per cent in the month of December, research from LMS has revealed.
The research, Monthly Remortgage Snapshot, showed in addition to the rise in remortgage completions, the overall cancellation rate for remortgages decreased to 7.61 per cent.
LMS CEO, Nick Chadbourne said these figures were driven by lenders being “much more competitive on pricing” at the end of the year.
He added this “naturally” made a full remortgage “more favourable” to borrowers.
Remortgage loan sizes were also included in the research, with 40 per cent of loans increasing their total size over the month.
As a result of this, the average loan increase post remortgaging reached £18,121, while the average loan decrease post remortgaging reached £15,127.
December also saw 78 per cent of borrowers increase their monthly remortgage repayments by an average of £392.
Regional trends
The research found a regional disparity in remortgaging, with the average remortgage loan amount in London reaching £376,713, 110 per cent higher than the average for the rest of the UK.
This was just ahead of the South East, with an average remortgage amount of £283,063, and East Anglia, with an average of £254,142.
This was in contrast to the North East where the average price was £128,158, lower than the UK average of £218,379.
A similar regional difference was also found in the length of the remortgage, with Wales representing the longest period of 60.55 months.
This was ahead of the West Midlands, with an average length of 56.81 months, London at 56.58 months, and Yorkshire with 56.51 months.
Meanwhile, the East Midlands was found to be the region with the lowest average length with just 49.58 months, below the UK average of 53.97 months.
Product purchasing
LMS’s research provided insight into the remortgage products that were purchased over December, with 2-year fixed being the most popular, bought by 42 per cent of borrowers.
This was ahead of 5-year fixed, bought by 34 per cent, and tracker, bought by 13 per cent.
Chadbourne described these findings as “unsurprising”, expecting this trend to continue at least in the first half of 2024.
Borrower’s motivations were also examined, with 33 per cent hoping to achieve lower monthly payments through remortgaging.
Additionally, 22 per cent said their primary goal was to lock in a good deal now and 18 per cent said it was to release equity on their property and borrow more money.
“The continued drop in swap rates is an indication that inflation will fall and so it’s widely predicted that the Bank of England will cut the base rate this year,” Chadbourne explained.
“Naturally this will result in lower mortgage rates, so those needing to remortgage now will be unlikely to want to tie themselves in for more time than they have to.
“On top of that, house prices have fallen, albeit slowly, increasing affordability - all of these factors make remortgages more favourable to product transfers once more, so we expert the pipeline to pick up in January after the December contraction.”
