House purchase loans reach 22-month high: CML

House purchase loans in October reached their highest level since December 2007, according to the latest data from the Council of Mortgage Lenders (CML).

The number of loans for house purchase reached 55,000 in October. 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% from that low point.

However, this pattern of increase was not repeated with loans for remortgaging which have stayed static for two months at 33,000.

Fixed rate 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%.

The CML said borrowers are turning to trackers mainly because they now have a greater expectation that interest rates will stay at, or near to their current low for a while to come.

Lenders are also pricing their trackers at lower rates than their fixes, which have made trackers very appealing to those able to meet the criteria necessary to take advantage of them.

Michael Coogan, director general of the CML, 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."