Borrowing for residential property purchases continued to slow sharply during the second quarter of the year, the latest figures show.

Following a weak first three months of 2023, mortgage lending activity was down by almost a third compared – 30% – with the corresponding period last year, according to UK Finance.

The data also reveals that affordability concerns saw record numbers of borrowers opting to refinance with their existing providers. Typically borrowers looking to switch to other lenders have to undergo a new affordability test.

Some 84% of remortgaging deals were internal transfers compared to an average of 77% across 2022. April’s figure of 88% was a record monthly high.

UK Finance analysed the impact of higher rates on customers refinancing internally, and concluded that customers typically retain “a decent level of wiggle room”.

Eric Leenders, MD of personal finance at UK Finance, said: “Whilst the cost of living challenges have created acute hardship for many, we have also seen that other consumers were largely able to pay off their credit card bills and meet their monthly mortgage payments. Some have been dipping into their savings to help to pay the bills, whereas some of those with savings have moved their money to accounts with higher rates to maximise their income.

“Around 700,000 borrowers have come off their fixed rate deal in the first half of this year and likely found themselves on a much higher rate, which continue to be largely affordable because of the “stress tests” applied when the mortgage was originally taken out. But circumstances can change, so if anyone is struggling with their mortgage payments, they should reach out to their lender who will have a range of tailored support available to help.”