Remortgaging lifts the market

Gross lending totalled £20.5bn, with loans for house purchase accounting for £10.5bn. Once again, remortgaging accounted for more than two fifths of all lending, totalling £8.5bn.

Lending criteria remained within sensible parameters, however, with first-time buyers borrowing on average 76% of the value of their property, and movers borrowing on average 62%. First-time buyers borrowed an average of 2.55 times their income, while former owner-occupiers borrowed an average 2.35 income multiple.

Interest rates on new loans continued to be exceptionally competitive, with the average new variable rate 4.29% and the average new fixed rate 4.78%. Fixed rate lending accounted for nearly a third of all lending, and has become more popular in recent months following a dip in popularity in the summer.

Commenting on the figures, CML Deputy Director General Peter Williams said: "Once again, there is little sign of any let-up in mortgage lending. Nevertheless, we continue to expect a less frenetic housing market next year, with house price inflation returning to more sustainable levels. We continue to urge borrowers to exercise sensible judgment about both mortgage and consumer borrowing, and not to expect the kind of growth in house prices that we have seen this year. With unemployment and interest rates both expected to rise to some degree in 2003, people need to factor in a less benign economic environment to their future borrowing decisions."