LMS’ Remortgage Healthcheck Index is a quarterly report, and uses four indicators around remortgage approvals, borrowing costs, homeowner equity and consumer sentiment.
It scores between zero and 100, with scores between 40 and 60 considered neutral and over 60 considered positive. The overall index is the weighted average of each indicator score.
The latest report for Q2 found that the borrowing costs indicator fell by 30.1 to 40, which is the sharpest contraction in the index’s history.
The overall health of the market was ranked 54.7.
The score for remortgage approvals fell in Q2 to 45.9, which compared to the previous quarter when it fell by its largest margin since 2011.
Borrower sentiment also fell for the fourth consecutive quarter to 57.1, but the amount was more muted at 0.1 point.
Homeowner equity dipped from its high in Q1 to 96.9, which the report said was due to house price growth beginning to slow.
Nick Chadbourne (pictured), chief executive of LMS, said that the drop in borrowing costs indicator showed that the base rate increases were the “biggest factor currently impacting the market as lenders are having to consider passing on some higher costs to the customer, something which they have admirably staved off doing for as long as possible”.
He continued: “With the ongoing cost of living crisis and impending recession, this trend is likely to continue, but the homeowner equity indicator remained in positive territory – though house price growth slowed marginally, it still acted as a buffer and, together with the rise in average approvals values, prevented the overall indicator score dropping more substantially.”
Chadbourne said that borrowers should focus on locking in lower costs for longer and it was important for lenders and brokers were “available and accessible”.
He said this was especially important as £1bn of mortgage products are set to mature before the end of the year, and with “ongoing upheaval markets could become more volatile”.
