Loans for house purchase at their highest for nearly two years
10 Dec 09
The number of loans for house purchase in the UK reached 55,000 in October, its highest level since December 2007, according to new data released by the Council of Mortgage Lenders.
The amount of buyers has risen from a trough in January 2009 when only 23,000 loans were advanced. It is now up 140% from that low point.
However, this pattern of increase is not repeated with loans for remortgaging which have stayed static for two months at 33,000. Apart from a total of 30,000 in August 2009, remortgaging is at its lowest level since we began this run of data in 2002.
Table 1: Loans for house purchase and remortgage
| Number of house purchase loans | Value of house purchase loans £m | Number of remortgage loans | Value of remortgage loans, £m | |
| October 2009 | 55,300 | 7,500 | 33,000 | 4,000 |
| Change from September 2009 | +9% | +7% | n/c | -2% |
| Change from October 2008 | +43% | +39% | -52% | -57% |
Table 2: Loans to first-time buyers and movers
| Number of first-time buyer loans | Value of first-time buyer loans | Number of home mover loans | Value of home mover loans, £m | |
| October 2009 | 19,700 | 2,200 | 35,600 | 5,200 |
| Change from September 2009 | n/c | -4% | +15% | +8% |
Change from October 2008 | +34% | +29 | +49% | +44% |
Fixed mortgages are continuing their downward trend from a high in July, when 80% of all new loans taken out were fixed. In October, this had decreased by 14% to 66%. Tracker mortgages, however, are on the rise with 21% of all new loans being trackers, compared to July's low of 12%.
Table 3: Fixed-rate and tracker loans
| Number of fixed-rate loans | Percentage of fixed-rate loans | Number of tracker loans | Percentage of tracker loans | |
| October 2009 | 57,900 | 66% | 18,600 | 21% |
| Change from September 2009 | -4% | 73% | +34% | 17% |
| Change from October 2008 | -3% | 56% | -46% | 32% |
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. That, coupled with lenders pricing their trackers at lower rates than their fixes, makes trackers very appealing to those able to meet the criteria necessary to take advantage of them.
Commenting on the data, 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."
Notes to editors
1. The Council of Mortgage Lenders' members are banks, building societies and other lenders who together undertake around 98% of all residential mortgage lending in the UK. There are 11 million mortgages in the UK, with loans worth over £1.2 trillion.
2. Source: CML/Banksearch
3. The November RMS data will be released on Thursday 14 January 2010.
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