Most popular five-year fixed mortgage product in May as cost of living crisis hits – LMS

About 63% of those who remortgaged in May took out a five-year fixed-rate product, with borrowers increasingly opting for longer-term fixed rates for more financial security.

According to LMS’ monthly remortgage snapshot for May, a quarter opted for a two-year fixed rate, while five per cent chose a 10-year fixed rate.

Almost 64% said they wanted security in their monthly payments, and more than a quarter were worried about the economy and wanted to lock in a fixed rate. Another quarter added that he was worried about job security.

Just over a quarter, 26%, said their main goal when re-mortgizing was to reduce monthly repayments, then free up equity and get a good deal now at a quarter respectively.

Around 44% of mortgage customers increased their loan amount in May, with the average post-mortgage loan increase set at £20,707. The average decrease in loans after mortgage was £11,882.

Among the 43% who reduced their monthly mortgage payment, the average decrease was £181.

Around 44% said they had increased their monthly mortgage payments, with the average monthly repayment set at £207.

Instructions increased 73% during the month, although the number of mortgage products completed fell 2% during the month.

The the cancellation rate increased by nearly 1% from the April figure to 5.6%.

The average mortgage size in London and the South East was £308,432, while the average for the rest of the UK was £140,564. This meant mortgage amounts were 119% higher in London and the South East than in the rest of the UK.

The longest previous mortgage length was found in the North East at 80.65 months, or 6.72 years, and the shortest in the South East at 70.13 months, or 5.84 years. This meant that the term of the longest previous mortgage was 15% longer than the shortest.

Nick Chadbourne (illustrated), said the general manager of LMS consumers needed competitive, longer-term, fixed-rate products.

“The figures show that there has been a substantial increase in instructions indicating increased consumer demand and increased market activity, as expected last month.

Consumers are looking to save money in light of the cost of living crisis and further base rate hikes, trying to secure competitive longer-term fixed rate products ahead of the next charge date. early redemption (ERC) at the end of June.

He said that was part of the reason why the five-year fixed rate was the most popular product, adding that the number of people buying them increased by 10% in April.

“Indeed, in addition to providing longer-term financial security, many five-year or longer fixed-rate products are now cheaper than two-year fixed-rate products,” he explained.

Chadbourne continued that lenders would “try to stay competitive” and could consider expanding their range to include seven- or 10-year fixed rates.

“That said, uncertain economic conditions make affordability a much more important factor. We should expect lenders to become more cautious about their risk profile, and rightly so,” he said.

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