Five year remortgage products increase in popularity | moneyfacts.co.uk

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Michael Brown

Content Writer
Published: 30/06/2022

Nearly two-thirds of remortgage borrowers chose a five year fixed product, almost a 10% increase from the month of April.

Of those who remortgaged in May, nearly two-thirds of borrowers chose a five year product, according to the latest LMS Monthly Remortgage Snapshot. Compared to April, this figure has increased by almost 10%.

“This is because, in addition to offering longer-term financial security, many fixed rate products for five or more years are now cheaper than two year fixed rate products,” said Nick Chadbourne, CEO at LMS.

Like other sectors, average rates for a five year fixed mortgage have been increasing. In April the average rate for a five year fixed account was 3.01%, and as of June this figure is now 0.36% more, according to Moneyfacts data.

With competition among lenders also increasing in this corner of the market, Chadbourne believes this will encourage some to offer seven to ten year fixed products.

How do other fixed options compare?

Meanwhile, the appetite for 10 year fixed products increased marginally, with the amount of remortgage borrowers opting for this deal increasing by 1% month-on-month.

This continues to be a niche corner of the market, with only 127 products in total available to consumers as of June. Still, this is an increase of 16 products compared to April.

Two year fixed products, however, were the next most popular choice among remortgage borrowers, with a quarter of those remortgaging in May opting for this type of deal. This was a drop compared to the previous month, when a third of remortgage borrowers favoured this mortgage type.

“Consumers are looking to make savings in light of the cost of living crisis and further base rate rises, trying to lock in competitive, longer-term fixed rate products,” said Chadbourne.

As a result, tracker products remained the most unpopular choice among borrowers, with just 1% of remortgage borrowers opting for this type of product in May.

Why are people remortgaging?

Nearly two-thirds of respondents who remortgaged in May cited security over monthly payments as the primary motivation behind their remortgage.

To a lesser extent, a quarter of borrowers were fearful of the economy’s outlook and wanted to lock in a fixed rate now rather than later.

Still, those who remortgaged in May saw average monthly increases in their payments of nearly £210.    

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