Mortgage Climate, report by London Mortgage Broker, London Mortgage Advice Wednesday, 14th October 2009

Figures from the Council of Mortgage Lenders (CML) showed today that the mortgage market is operating on two levels, with the number of loans for house purchases rising over the past 12 months while the number of remortgages slumped.

The value of remortgages was down by 63% year-on-year at £3.6bn as the number of remortgages dropped to 32,000 during the month, 22% down on July's figure and 57% lower than in the same month last year.

29% higher than in August last year, the number of mortgages granted to homebuyers dropped slightly during the month, dipping 5% to 53,000.

Despite having more than doubled since the start of the year, house purchase loans remained significantly lower than the August average of 100,000 seen in the seven years before the credit crunch,

The value of loans for house purchases accounted for 58% of mortgage activity – the largest slice of the market since 2002. The number of remortgages has dropped off sharply as a result of low interest rates and tighter lending criteria.


Sticking with the current lender when moving off a special offer rate has proved cheaper than shopping around for a short-term fixed- or discount-rate deal. And indeed with the current news of rates staying at their very low levels for some years to come is likely to encourage more borrowers to sit tight rather than switching to a different lender.

It is a sad state of affoairs that some borrowers have found they are unable to switch, as falling house prices have reduced the amount of equity in their property and made it impossible to find a new deal. A reluctance to lend at high loan-to-values has exacerbated the problem.