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The number of loans for house purchases
in the UK reached 55,000 in October, its
highest level since December 2007, according to
new data released by the Council of Mortgage
Lenders (CML).
The amount of buyers has risen from a trough
in January 2009, when only 23,000 loans were
advanced. It is now up 140% from that low
point.
However, this pattern of increase is not
repeated with loans for remortgaging which have
stayed static for two months at 33,000. Apart
from a total of 30,000 in August 2009,
remortgaging is at its lowest level since we
began this run of data in 2002.
Fixed mortgages are continuing their downward
trend from a high in July, when 80% of all new
loans taken out were fixed. In October, this
had decreased by 14% to 66%. Tracker mortgages,
however, are on the rise with 21% of all new
loans being trackers, compared to July's low of
12%.
Borrowers are turning to trackers mainly
because they now have greater expectation that
interest rates will stay at, or near, their
current low for a while to come. That, coupled
with lenders pricing their trackers at lower
rates than their fixes, makes trackers very
appealing to those able to meet the criteria
necessary to take advantage of them.
Commenting on the data, CML Director General
Michael Coogan said: "We are still in a
two-speed mortgage market. It appears that low
interest rates for those with substantial
deposits, coupled with this year’s sustained
increases in house prices, are encouraging more
people to buy or move home.
"But the same low interest rates that are
driving house purchase activity provide little
incentive for borrowers to refinance their
loans. This, coupled with ongoing tightness in
lending criteria, continues to hold back the
remortgage market."
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