There was a 20% rise in the number of remortgages completed in July compared with the previous month, as almost half of borrowers opted for a five-year fix, according to the latest LMS Monthly Remortgage Snapshot.

The data revealed that a five-year fixed rate was the most popular product type for refinancing borrowers last month, with a two-year fix the second-most popular choice for people refinancing, with 44% going for this option. Just 7% of borrowers chose a three-year fix, 2% went for a 10-year fix and 2% selected a tracker mortgage.

Nick Chadbourne, CEO of LMS, said: “Looking further ahead, I feel we are on the cusp of some meaningful activity. We expect a 15-20% increase in product changes next year, and with the automation and improvements in remortgage conveyancing, we may see a move away from product transfers and a shift to full remortgage switching.”

The overall cancellation rate for remortgages increased by 26% month-on-month, while there was a 3% fall in the case pipeline.

Some 45% of people who remortgaged in July increased their loan size, by an average of £20,243. This aligned with 26% of borrowers saying the main reason they refinanced was to release equity from their homes.

Nearly a fifth – 19% – of borrowers reduced their loan size, by £15,561 on average.

For the 68% of people who saw their monthly payments increase after remortgaging, there was a £367.03 average increase in costs.

Some 11% of remortgagors saw no change in their monthly mortgage payments, while 21% saw this reduce by £304.20 on average.

Chadbourne commented: “The recent reductions in mortgage rates from a number of large lenders bode well for customers coming to the end of a fixed rate.

“But let’s remember that many of these customers were on historically low rates, so they are in for a bit of a shock – hopefully, the recent reductions soften the blow.”