Loans for house purchase increase

The amount of buyers has risen from a trough in January 2009 when only 23,000 loans were advanced. It is now up nearly 100% 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 the CML 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."