Remortgaging accounted for just 25% of total market in March, down from 29% in February.
However, data from the conveyancer showed that the volume and value of remortgaging increased annually in the year to March, by 16% (to 33,736) and 9% (£5.26bn) respectively.
As Mortgage Solutions reported last month, February saw a massive spike in remortgaging activity which appears to have returned to more normal levels in March. (Click to expand graph.)
LMS chief executive Andy Knee said Theresa’s May decision to trigger Article 50 was responsible for the abrupt drop.
“Remortgage lending plateaued at £5.2bn, and market share dropped to 25%, as homeowners predicted Article 50 would impact on the remortgage market.
“A general election and Brexit negotiations could spell disaster and coupled with rising interest rates, the remortgage market looks set to experience some tricky months between now and the end of the year,” he added.
According to the data, the average mortgage rate in February rose for the first time since September (up to 2.13% from 2.06%).
Meanwhile a third (32%) of borrowers chose five-year fixed deals, up from just one-in-ten (9%) in the previous month.
Variable mortgages decreased in popularity, with just 7% or borrowers choosing a variable mortgage – down from the 19% who previously had one.
These two trends may be related as borrowers decide to lock in rates long term before expected rises kick in.
The number of homeowners expecting a rate fall has dropped for the sixth month in a row. In September 2016, 9% of those polled by LMS expected rates to fall. By January, this had fallen to only 2% and now sits at just 1%.
Remortgagors predict further interest rate rises, with just under half (46%) expecting mortgage rates to rise again within a year.
Knee added: “On the bright side, the number of people remortgaging rose year-on-year in March – the result of improved affordability.
“Remortgage repayments accounted for just 17.3% of income in February, down from 18.4% in February 2016. Homeowners sought out cheap prices and long-term security when remortgaging. For those who managed to remortgage in March, this will be of paramount importance in the months to come.”