Demand for 5 year fixed remortgages continues decline: LMS

Borrowers are increasingly going away from five-year fixed rate remortgages and instead opting for two-year fixed rate remortgages. The two year products offer lower rates which have become increasingly attractive since November’s base rate increase. And with base rates expected to rise further this year, borrower’s worry about the risk of being in a longer term variable product. The shift has been significant with the five-year fixed rate remortgages dropping from 45% of the market in January to 37% in February. And with consumers incomes squeezed, five-year remortgage terms may have seen their peak.

Key Takeaways:

Demand for 5 year fixed mortgages is falling as demand for 2 year fixed mortgages is rising.
Demand for two year fixed mortgages is likely due to the base rate increase in November.
The demand for five year fixed rate mortgages is down eight percent, the lowest it has been since July.

“The proportion of borrowers choosing fixed two-year remortgages has increased to 24 per cent in February, up from 22 per cent the month before and the highest level of two-year fixed rate remortgaging in seven months”