Homebuyer loans hit 22-month high

The number of mortgages provided to homebuyers has reached its highest level for 22-months, according to the Council of Mortgage Lenders (CML).

There were 55,300 loans granted to homebuyers in October, up 9 per cent from September.

The CML said the amount of buyers has risen nearly 100 per cent from the bottom of the market in January 2009 when only 23,000 loans were advanced by lenders.

However, the number of loans for remortgaging has remained 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 started its data compilation in 2002.

Remortgaging activity has fallen significantly as a result of low interest rates, providing borrowers little incentive to refinance their loans.

The number of first-time buyer loans has increased 34 per cent to 19,700 since October 2008.

The CML said borrowers continue to take out tracker rates because they have a greater expectation that interest rates will stay at, or near, their current low for a while to come.

It said 21 per cent of all new loans advanced by lenders were tracker mortgages.

Michael Coogan, director general at the CML, 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.”