Instructions for new remortgage applications fell by 2% in August, indicating a slight decline in the number of homeowners starting the remortgage process, according to the remortgage snapshot by LMS.
Completions, which refer to remortgages that were finalised, decreased by 14%, suggesting fewer deals were completed compared to the previous month.
Meanwhile, the cancellation rate increased by 3%, reflecting a rise in borrowers withdrawing from the remortgaging process.
However, pipeline cases, representing remortgages in progress, increased by 1%, showing some ongoing activity in the market.
On average, borrowers who remortgaged in August faced an increase of £329.81 in their monthly repayments.
Half of all borrowers increased their loan size after remortgaging, which may point to growing financial pressures or a need to access more funds.
The most popular product was a 5-year fixed-rate mortgage, chosen by 45% of borrowers, reflecting a desire for payment stability.
Additionally, 27% of those who remortgaged did so with the goal of releasing equity from their property.
Loan size changes after remortgaging varied, with 50% of borrowers increasing their total loan amount, 29% seeing no change, and 21% reducing their loan size.
The average loan increase was £19,913, while the average loan decrease was £13,594.
Monthly repayments also shifted, with 67% of borrowers reporting an increase in their remortgage repayments and 25% seeing a reduction.
The average increase in monthly repayments was £329.81, while the average decrease was £384.79.
Regionally, there were significant differences in remortgage activity.
In London, the average remortgage loan amount was £384,538, which was 109% higher than the rest of the UK, where the average stood at £184,251.
The South West had the longest average previous mortgage term at 77.73 months, while East Anglia had the shortest at 65.87 months.
Nationally, the average length of previous mortgages before remortgaging was 69.76 months.
The average remortgage amount across the UK decreased by 1% to £207,455 in August, with London seeing a 4% increase, while East Anglia and the North East experienced the largest declines at 7% and 11%, respectively.
Borrower expectations regarding interest rate changes varied, with 35% expecting rates to increase within the next year, while 45% did not foresee any immediate rate hikes. The data suggests that fixed-rate products remain popular, with 74% of those who opted for fixed rates citing the security of knowing their monthly payments as the main reason.
Nick Chadbourne, CEO of LMS, said: “August trends follow months with higher monthly outgoings and a spread between mortgage terms.
“What remains a constant is the desire for customers to have security over their monthly outgoings.
“As we’re nearing Autumn, I was triggered to look at the same point in 2022, just before Liz Truss introduced the mini-budget. At that time, almost 70% of homeowners were taking
“5-year products, and loan sizes were increasing by around half of what we see today.
“Given that millions of borrowers remain at the low rates from pre-2022, many are still to be hit by the rate shock of remortgaging.”
