A record number of remortgagers took out five-year fixed rates in August as borrowers looked to head off a potential rise in interest rates.
The proportion opting for a five-year fixed rate climbed from 37 per cent to 39 per cent during the month, according to conveyancing service provider LMS.
It came amid an 11 per cent jump in remortgager numbers, which took the total number to 41,497 – the highest since January.
Annually, the number of remortgagers increased by 16 per cent.
The total value of remortgaging on a month-on-month basis dropped by 5 per cent to £6.38bn in August, while just 16 per cent of borrowers lowered their overall mortgage payments by remortgaging.
Instead, LMS said borrowers took action in order to lock into deals with record-low rates and manage the impact of potential rate rises.
Lenders have recently begun raising interest rates on their mortgage products in anticipation of an increase in the Bank of England’s base rate in November.
Nick Chadbourne, chief executive of LMS, said: “While the total value of remortgaging has fallen, with the average amount of equity released falling by 12 per cent in August, we are seeing a surge in the number of transactions – the number of people remortgaging hasn’t been this high since January.
“Remortgagers are locking into record low rates to manage the impact of potential rate rises and bolster their financial security. This makes sense given borrowers were warned that time could be running out to fix into low cost deals in August.”
Ian Bavey, investment and mortgage adviser at Newport-based Seer Green, said: “In the last fortnight or so, we have seen more people asking about longer-term fixed rates. The difference between five-year fixed rates and shorter-term rates is not as big as it once was, which makes it more attractive.
“Historically, a two-year fix would be nine in 10 mortgages, but at the moment it is nearer 50/50.”