The number of people remortgaging on to five-year fixes broke a new record in September ahead of an expected rise in interest rates.
Two-fifths (42 per cent) of remortgagers opted for a five-year fixed deal in September, according to conveyancing service provider LMS.
The percentage of remortgagers fixing for five-years has now grown for seven consecutive months.
Remortgaging is now more affordable than ever, with annual repayments falling to 16.4 per cent of total income - an all-time low.
In September alone, the number of remortgagors jumped by 13 per cent to 41,573 from August’s 36,700, while the value of remortgaging rose by 2 per cent to £6.6bn over the same period.
The Bank of England’s Monetary Policy Committee is widely expected to increase the base rate from its all-time low of 0.25 per cent when it convenes tomorrow (Thursday, 2 November).
Nick Chadbourne, chief executive of LMS, commented: “With 56 per cent of September’s borrowers fearing an impeding rate rise - a significant increase from the 45 per cent seen in August - anticipation of rate increases is driving this surge.
“With mortgage rates the second-lowest on record, and remortgaging more affordable than ever, borrowers are taking the initiative to lock into these low rates.”
Martin Stewart, director at London Money, said: “We are in an interesting part of the cycle right now. We have had years of inertia and it is hard to shake people out of that. The argument for longer-term fixes is more compelling now than at any time in the last six years.”
He added that brokers needed to have a detailed conversation about borrowers’ plans, as five-year fixes are unsuitable for people who may be looking to move house in two years.