Demand for 2-year fixed deals rose for the first time in four months following the interest rate rise in November, conveyancing service provider LMS has found.
After declining from a 30% market share in March to a 20% market share in October, 2-year fixes bounced back to account for 23% of remortgages in November.
Nick Chadbourne, chief executive of LMS, said: “By finally moving to increase the Bank Rate, the Governor of the Bank of England seems to have left people concerned about how they are going to handle the next two years instead of trying to forecast how they can handle the next five.
“Having searched for certainty in the run up to the rate rise, consumers are now looking at what’s in store for them more immediately.”
LMS said the increase in the market’s appetite for 2-year fixed deals is a first glimpse at the new interest rate environment’s effect on borrower behaviour.
Demand for 5-year fixed deals has decreased for the first time in 10 months, falling from last month’s record-high of 50% to 43% in November.
Some 88% of those remortgaging said they thought another hike will occur within the next year.
In every region of the UK, mortgage terms increased in November as people looked to lower monthly payments.