Mortgage lending hits a 22-month high

The property market has been picking up since the start of the year

The number of mortgages granted to house buyers hit a 22-month high in October, according to the Council of Mortgage Lenders (CML).

It said 55,300 mortgages were granted to buyers, the highest number since December 2007.

This was a 9% increase from September and up 43% from October last year.

The CML said mortgage lending to buyers had now doubled since its low point in January this year, but remortgaging was still very subdued.

"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," said CML director general Michael Coogan.

"But the same low interest rates that are driving house purchase activity provide little incentive for borrowers to refinance their loans."

Revival

First-time buyers are still having to put down average deposits of 25%, the CML's figures show, despite a gentle easing of the industry's mortgage rationing in the past few months.

"There has been a significant increase in the number of mortgages available up to 80%, 85% and even 90% loan-to-value," said Ray Boulger of mortgage brokers John Charcol.

"Furthermore the additional competition in this sector of the market has pushed some rates and some arrangement fees lower," he added.

The number of mortgages approved, but not yet lent, picked up again in September and October after reaching a plateau during the summer months.

The recent data, from the Bank of England, suggests that mortgage lending and sales are likely to continue rising in the coming months.

The slump in sales and prices during 2008 was the sharpest since the economic depression of the 1930s.

But after reaching a nadir at the turn of the year, both sales and prices have been on an upward trend.

This has taken most observers by surprise, but many think that while sales may continue rising next year, prices are likely to flatten out.