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Monday 14th of December 2009
December 10, 2009    

House purchase loans at highest level for two years

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by Gill Montia

The Council of Mortgage Lenders (CML) has reported that approvals for house purchase loans increased to 55,000 in October, the highest level since December 2007 and up from a January 2009 low of 23,000.

However, October remortgaging approvals remained static on a month earlier at 33,000 and apart from a total of 30,000 in August, remortgaging is at its lowest level since CML records began.

Approvals for fixed-rate mortgages continued their downward trend from a high in July, when 80% of all new loans taken out were fixed.

In October, volumes decreased by 14%, to 66%, as 21% of borrowers opted for trackers, compared to July’s tracker low of 12%.

The CML comments: “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.”

Director general Michael Coogan adds: “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.”

He adds: “But the same low interest rates that are driving house purchase activity provide little incentive for borrowers to refinance their loans.”

Mr Coogan concludes: “This, coupled with ongoing tightness in lending criteria, continues to hold back the remortgage market.”

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