Falling mortgage rates spark 14% increase in January remortgaging: LMS

14% more remortgages completed in January compared to the previous month, while instructions rose by 70% as declining mortgage rates drove remortgaging amidst rising house prices, according to the latest research from LMS.

However, the overall cancellation rate increased by 37% in January and pipeline cases decreased by 0.43% month-on-month.

45% of those who remortgaged took out a two-year fixed rate product and 30% said their main aim when remortgaging was to lower their monthly payments, the most popular response. Despite this, the average monthly payment increase for those who remortgaged was £381.

Nick Chadbourne, CEO of LMS, said: “As swap rates continue to stabilise, we have seen an increase in competition among lenders and more favourable pricing options for remortgaging customers. As a result, we saw a 14% uptick in remortgage activity in January and a 70% increase in instructions.

"There has been a noticeable shift towards shorter-term fixed rate options too, with 45% of remortgagers taking out a two-year fixed-rate product – the most popular choice in January. Customers are adapting to the ‘new normal’ for rates and are seeking short-term products so they can reassess their options if rates decrease further in the future.

"While we’ve seen a decline in average mortgage rates, recent data highlights that house prices have risen at their fastest rate since this time last year, with a 2.5% increase. This may result in a more favourable LTV ratio for many customers, and we anticipate this will lead to a more pronounced uptick in market activity in the coming months."