
Borrowers leaned towards short-term deals in July as the remortgage market saw a sharp rise in completions, according to the latest LMS Monthly Remortgage Snapshot.
The report shows that 46% of borrowers opted for two-year fixed rate products, compared with 41% who chose five-year fixes. Just 4% selected a three-year fix and 2% took a 10-year product.
Completions rose 71% month-on-month, while pipeline cases fell 9% and instructions dropped 4%, pointing to a rush of borrowers finalising deals before their current home loan expires. The cancellation rate edged up by 1%.
The data also highlights the continued strain on household finances. Borrowers who remortgaged in July faced an average monthly repayment increase of £329.54, with more than half (56%) seeing their monthly outgoings rise. By contrast, around a third (33%) managed to reduce their repayments, with an average monthly saving of £207.63.
At the same time, many borrowers appear to be using remortgaging as an opportunity to release equity. Almost half (43%) increased their loan size in July, borrowing on average an additional £20,848.
This figure is almost double the average amount by which those reducing their debt cut back (£12,739). A further 30% reported no change in their loan size, underlining the varied strategies homeowners are taking as they adjust to higher rates.
Regionally, remortgage activity revealed sharp differences across the UK. The average remortgage loan stood at £231,936, up 11% on June. London remained by far the most expensive market, with an average loan of £408,865—more than double the average for the rest of the country.
However, the most striking month-on-month increase came in the South West, where the average remortgage rose 13% to £212,849, signalling growing affordability pressures outside the capital.
The South East also posted strong growth with a 12% rise, taking its average remortgage amount to £300,704. In contrast, Wales was the only region to see a decline, with average loan amounts falling 2% to £151,080.
The length of previous mortgages also varied significantly. On average, borrowers had held their prior deal for just under five years, at 58.94 months—a notable 18% fall from June, suggesting faster refinancing cycles. The North East recorded the longest average at 67 months, while the South East had the shortest at just 55 months.
The snapshot also highlights a split in expectations over the direction of interest rates. Almost half (44%) of borrowers expect base rates to rise within the next 12 months, while 19% believe an increase is further away and more than a third (37%) do not expect any rise at all.
LMS chief executive Nick Chadbourne said: “Most borrowers have favoured short-term certainty, with two-year fixed-rate products becoming the most popular choice. While monthly repayments increased for many, the desire to manage costs and secure financial stability remained a key driver. Further spikes are likely to occur around quarter-end, when more fixed-rate products expire.”