Borrowers Face £329 Higher Repayments as Short-Term Deals Dominate

Remortgage activity soared in July as homeowners rushed to lock in new deals before existing terms expired. LMS data shows completions rose 71% month-on-month, with two-year fixes overtaking five-year products as the most common choice. The surge reflects growing demand for short-term certainty amid higher repayments and regional variations in loan sizes.

According to LMS’s latest Monthly Remortgage Snapshot, 46% of borrowers chose two-year fixed-rate deals in July, compared with 41% selecting five-year terms. Just 6% opted for either three- or ten-year fixes.

Completions jumped 71% compared with June, while pipeline cases dropped 9% and new instructions fell 4% — a sign that many borrowers are finalising deals before their existing mortgage products end. The cancellation rate edged up slightly by 1%.

Remortgaging continues to put household budgets under pressure. Borrowers in July faced an average monthly repayment increase of £329, with 56% seeing costs rise. Around a third, however, managed to reduce their monthly outgoings, saving an average of £207.

At the same time, many homeowners used remortgaging to access additional funds. Nearly half (43%) increased their loan size, borrowing an average of £20,848 — almost double the amount by which debt reducers cut back (£12,739). Another 30% reported no change, showing a mix of strategies as borrowers balance higher rates with financial needs.