There were 24,863 remortgage loans issued last month, down from the 27,100 recorded in August 2013, while average loans values also decreased by 3% monthly to £155,589.
More equity is being withdrawn when remortgaging properties, as the amount of withdrawn equity was up 9% in August to eclipse £500m.
Andy Knee, chief executive of LMS, said: “The hangover from MMR accounts for lower remortgage volumes, as those who could remortgage for a better rate or to reduce monthly payments are put off by the time-consuming and intrusive checking process.
“However, as the process is fine-tuned, affordability will come down, lender appetite will return and the arrival of highly competitive rates towards the end of the year will encourage more remortgage activity, to offer excellent long-term fix opportunities.
“House price increases have also put people in a better position to remortgage, raising the amount of equity they have – and in some cases taking people out of negative equity caused by the crash – allowing them to withdraw more equity through remortgaging without increasing the size of their LTV.”
According to the CML interest rates increased to 3.2% in July, while average monthly household incomes for new mortgages rose by 4.9% to £46,145. Based on such data, LMS concluded that annual remortgage repayments now account for more than a fifth (20.3%) of household income – the lowest ratio since the start of 2014. This is far lower than the typical household income rate for a new purchase mortgage, which stands at 22.2%.
Knee added: “Rising incomes, recorded by CML for the second month in a row, coupled with the entrance of more competitive remortgage rates mean that repayment as a percentage of income is now at its lowest amount since the start of the year – great news for customers considering remortgaging.
“Even with an interest rate rise anticipated for the Spring of next year, Carney’s insistence that it will be slow and gradual means that competitive rates will persist, and customers will keep their affordability intact – something critical to all those that have found their purse-strings stretched over the past few years.”