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Mortgage news: loans for house purchase at two-year high

By Matthew Plant - Financial specialist

10 December2009

According to figures from the Council of Mortgage Lenders (CML), the number of loans for house purchase in the UK reached 55,300 in October - the highest it has been since December 2007, and 43% higher than the figure recorded the same time last year.

Yet despite the increase in loans for house purchase, the number of loans for remortgaging didn`t change for the second month running, leaving remortgaging at its lowest level since the CML `began this run of data` in 2002, with a single exception - the figure of 30,000 we saw in August this year.

Fixed mortgages continued their `downward trend`, decreasing by 14% between July (when a full 80% of all new mortgages were fixed) and October. Tracker mortgages, though, actually increased - with 21% of all new loans in October being trackers.

The CML states that `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.`

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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Tags: mortgage, loans, fixed rate, fixed rate mortgage, tracker, tracker rate, tracker rate mortgages, mortgage loans, remortgage, remortgaging

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