This figure is 26.3% lower than this time last year when the figure stood at £4.3m in August 2011, said LMS. Its data showed that remortgages represented a quarter of all gross mortgage lending, down from 33% in August last year.

This is the lowest proportion of total mortgages for 12 years.

The average remortgage loan amount has risen by over £2,600 to £135, 427 in August, the highest since the beginning of the year. LMS said average loan amounts have been gradually rising since February and August’s figure is the highest it has been since January 2009 when it stood at £138,322.

LMS estimates that the number of remortgage loans will decrease by 3% to 23,400 in August, from 24,100 in July, remaining below the more typical 30,000 during 2011.

Andy Knee, chief executive of LMS said: “In August we saw a significant uplift in new business and this is now beginning to flow through into completions. Therefore September and October are expected to be much stronger months for remortgage lending as customers complete their switches to one of the numerous long term fix rates at below 3%.

“With September new application levels having stabilised at this higher run rate we can expect a strong end to the year for the remortgage market. However remortgage lending as a proportion of overall lending may still appear subdued as we are also seeing a significant uplift in house purchase activity driven by the government’s NewBuy scheme. Many of these customers and the builders they are buying from will be highly motivated to complete their purchase before the end of the year so I am anticipating a strong end to the year for purchase lending too.”