Remortgage activity surged by a fifth in July as homeowners rushed to lock in better deals following recent interest rate cuts.

According to the latest data from LMS, a leading mortgage technology provider, there was a significant 20% jump in the number of remortgages completed in July compared to the previous month.

Five-Year Fixes Most Popular

The most popular choice for borrowers looking to refinance was a five-year fixed-rate mortgage, with almost half (49%) opting for this option. This was followed by two-year fixes, chosen by 44% of borrowers.

Other mortgage types, such as three-year fixes, ten-year fixes, and tracker mortgages, were far less popular, chosen by only a small percentage of homeowners.

Remortgaging to Release Equity

The data also revealed that 45% of borrowers who remortgaged in July increased their loan size, adding an average of £20,243 to their mortgage. This suggests that many homeowners are taking advantage of lower rates to release equity from their homes, perhaps for home improvements or other expenses.

On the other hand, 19% of borrowers used the opportunity to reduce their loan size, decreasing it by an average of £15,561.

Impact on Monthly Payments

For the majority of borrowers (68%), remortgaging in July resulted in an increase in their monthly payments, with an average rise of £367.03. However, 21% did see their payments decrease, by an average of £304.20.

Expert Predicts Rise in Remortgage Activity

Nick Chadbourne, CEO of LMS, believes this surge in remortgage activity is just the beginning.

“Looking further ahead, I feel we are on the cusp of some meaningful activity,” he said. “We expect a 15-20% increase in product changes next year.”

Chadbourne also noted that while recent rate reductions are a welcome relief for homeowners coming to the end of their fixed-rate deals, many are still likely to face payment increases compared to the historical lows they’ve been used to.