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Nearly two thirds of remortgage seekers chose five year fixed rates.
Five year fixed mortgage options became the most popular product for remortgage consumers in February, according to the LMS Monthly Remortgage Snapshot. Of those who remortgaged, 62% took out a five year fixed rate, followed by 30% who took out a two year fixed rate.
Overwhelmingly, borrowers cited “security over monthly payments” as the primary reason why they opted for a fixed-rate mortgage. This was followed by market uncertainty as the reason for choosing this type of remortgage.
"Those borrowers who are sitting on a standard variable rate could save hundreds of pounds by switching to a fixed rate mortgage, but they may want to act sooner than later as rates continue to rise," said Rachel Springall, Finance Expert at Moneyfacts.
In addition, this trend is understandable when we look at Moneyfacts data.
The average five year fixed term mortgage stood at 2.71% as of 1 March this year, 0.22% lower than that recorded on the same date five years ago.
However, this rate is catching up. Today the average five year fixed rate is 2.88%, just 0.05% shy of the average recorded on 1 March 2017.
This has been the theme this year, as of 1 January this average rate stood at 2.66% before jumping to 2.71% on 1 February.
Apart from a drop in 2021, borrowers will be glad to learn that the choice in five year mortgage products has increased year on year.
Five years ago, the total product count for these mortgage options stood at 1,094. As of 1 March this year, it has increased by almost half.
Still, this is a slight drop off from the beginning of this year when the total product count stood at 1,682.
With three successive base rates at the back of consumers’ minds, tracker mortgages remain unpopular. In fact, they were preferred by just 1% of remortgage seekers in the LMS Monthly Remortgage Snapshot.
Looking at our data, term tracker mortgages, which are offered at a variety of different time periods, stood at an average rate of 3.51% for 1 March.
This has only been increasing, after registering at 3.53% at the start of the new year. Dating back further, the gap becomes starker.
On 1 March 2017 the average term tracker rate was 2.69%, 1.07% less than the rate recorded today
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