Home loan approvals reach 22-month high
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By Adam Leveridge. |  |
Thursday, 10, Dec 2009 12:12
By Sarah Garrod.
The number of home loans in the UK reached 55,000 in October, according to figures out today.
The Council of Mortgage Lenders (CML) said the figure was its highest for 22 months, since December 2007, and was up nearly 100 per cent from its low point in January 2009.
The CML said the pattern seen in loans was not the same for remortgaging, which has stayed static at 33,000 for two months. Apart from a total of 30,000 in August 2009, remortgaging is at its lowest level since the CML began this run of data in 2002.
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."
The CML said borrowers are turning to tracker mortgages "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.
David Brown, commercial diector of LSL Property services, said: "It's still too soon to start opening the bubbly, but the lending market is clearly ending 2009 on a much more positive note than 2008.
"With the number of loans for house purchase up nearly ten per cent on October and over a third compared to the year before, the lending market has taken another big step along the road of recovery.
"We've seen the impact of gradual improvement in confidence in the housing market as the year has gone on - loans for house purchase are over double their January levels. Lenders just need to keep offering more affordable products to first-time buyers and property investors to keep up the progress into the New Year."
On Tuesday the Halifax said house prices had risen for the fifth consecutive month. The average price of a home is now, according to the bank, £167,664.