Remortgage lending jumped in July as borrowers look to take advantage of competitive deals before the Bank of England starts raising base rates.
But homeowners will have to act fast to secure the best deals, with mortgage rates having risen for five consecutive months.
The total value of remortgage lending rose by 9% to more than £4 billion, according to new figures from LMS published today.
The number of remortgage loans also rose 7% in July to 25,325, but that is down by 14% on last year due to the Mortgage Market Review and tighter regulations across the market.
The average remortgage has fallen to £159,582, down 2% on June, but still 9% higher than July 2013.
Remortgages now account for 21% of the total market, down from 25% in June last year.
Mortgage rates are starting to climb to an average of 3.15% in June, the fifth consecutive monthly rise, according to data from the Council of Mortgage Lenders.
Although this is still well below the 5.89% seen in October 2008, the last six months indicate a gradual trend and continued rises may impact affordability levels for homeowners.
Based on this mortgage rate, annual remortgage repayments now account for 21.7% of household income, slightly higher than July when they accounted for 20.7%.
The typical rate for a new purchase mortgage is currently 21.9%.
However, the average monthly household income for all new mortgages rose by 2.3% in June, to an average income of £43,938, as wages finally start to see some growth.
Andy Knee, chief executive of LMS, said: "With two members of the Bank of England's MPC already staking a claim for an immediate base rate rise, an increase looms ever closer, having an impact on aspiring and existing homeowners.
"However, customers shouldn't panic as any change is likely to be gradual allowing customers plenty of time to explore the best rates available to them.
"Affordability remains key to the property market. With the average amount of equity released through remortgaging falling by 4% from last month, it is apparent that more stringent rules and less competitive rates are taking their toll.
"That said, it is still possible for customers to get a good deal if they hunt around, with 60% of those who remortgaged doing so to lower their mortgage rate.
"We expect uncertainty surrounding a base rate rise will also encourage a surge in remortgage activity, especially later on in the year as more customers look to fix rates while they can, and before rates creep up any further."
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