Home buying at highest since 2007

The number of loans for house purchase in the UK reached 55,000 in October, its highest level since December 2007, according to 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 nearly 100 per cent from that low point.

However, in contrast, remortgaging figures are at their lowest since 2002, at 33,000 said the CML.

Fixed mortgages are continuing their downward trend from a high in July, when 80 per cent of all new loans taken out were fixed. In October, this had decreased by 14 per cent to 66 per cent. Tracker mortgages, however, are on the rise with 21 per cent of all new loans being trackers, compared to July's low of 12 per cent.

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.

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."