Mortgage lending increases in October

Last month revealed a five per cent increase in mortgage lending, according to the Council of Mortgage Lenders (CML).

The tally for October was £13.5 million, compared with £12.9 million in September, which the CML said was a normal month-month rise at that time of year.

However, the amount lent was 27 per cent down from the October 2008 figures.

CML economist Paul Samter stated that the figures revealed two trends heading in different directions, with more loans for house purchases and fewer for remortgages.

He stated: House purchase activity has picked up significantly. In contrast, remortgaging has dropped to decade-low levels as many borrowers have little incentive to refinance when they move onto low reversion rates.”

However, the lack of incentives to remortgage caused by low interest rates may be helping some to maintain their payments by reducing the amount they have to pay.

The CML recently said less homes would be repossessed this year than expected, lowering its annual forecast from 75,000 to 48,000.

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