The number of remortgage approvals across the mortgage industry fell more moderately in the second quarter compared to its sharpest decrease in 11 years during Q1.

According to the latest LMS Remortgage Healthcheck Index, Q2 also saw a decline in the borrowing costs indicator.

The LMS index uses four key indicators – remortgage approvals, borrowing costs, homeowner equity and consumer sentiment – with each scored between 0 and 100. Scores between 40 and 60 are considered a neutral outlook, a score below 40 is considered negative while a score over 60 a positive outlook for the industry.

The score in the remortgage approvals slipped to 45.9 while for borrowing costs, Q2 saw the indicator fall by 30.1, its sharpest ever contraction in the LMS index’s history.

After reaching the highest possible reading in Q1, the homeowner equity indicator dipped slightly in Q2, to 96.9, as house price growth began to slow during the quarter. The other indicator, consumer sentiment, scored 57.1, having slipped for the fourth consecutive quarter.

LMS also an overall index score, which is the weighted average of each indicator score, and this stood at 54.7 for Q2.

Commenting on the data, CEO at LMS, Nick Chadbourne, said: “The drop in the borrowing costs indicator shows that, perhaps unsurprisingly, the Bank of England base rate increases are 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.

“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.

“For borrowers, the focus should now be on locking in lower costs for longer, and it’s important for lenders and brokers to make sure such products are available and accessible, especially as £1bn worth of mortgage products are set to mature before year end and with ongoing upheaval markets could become more volatile.”

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