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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
”House

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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