The proportion of fixed-rate lending has almost halved in the last six months.
CML figures show that fixed rates accounted for just 26 per cent of new mortgages in January compared with a peak of 47 per cent last August.
The CML says this reflects the fact that fixed rates have become more expensive. The average new fixed rate is now 4.68 per cent compared with an average new variable rate of 4.41 per cent. Last August, the average fixed rate was 0.35 per cent lower than the average variable rate.
Gross lending by CML members fell by 10 per cent to £21.5bn in January from £23.9bn in December although it was up by 11 per cent from £19.3bn in January 2003.
Building societies also saw an increase in gross advances by 3.7 per cent to £3.46bn in January from £3.34bn a year earlier although net advances were virtually static over the period, according to the Building Societies Association.
Societies had net inflows of savings of £94m compared with a net outflow of £150m in January 2003. Net receipts into cash Isas were £209m.
The CML says the equity-release market grew by 69 per cent last year. Lenders advanced 25,000 lifetime mortgages worth over £1bn compared with 16,300 mortgages worth £655m in 2002.
New equity-release business in the second half of 2003 was almost three times the value of lending in the first half of 2002. Nearly all loans were on a rolled-up interest basis, where the borrower is not required to make payments until the property is sold.
CML director general Michael Coogan says: “The figures illustrate just how price-sensitive consumers are to the up-front costs they face. With the cost of fixed-rate mortgages having overtaken the cost of variable-rate loans, borrowers are turning away from them in favour of variable rates.”
BSA director general Adrian Coles says: “January is traditionally a quieter month for mortgages but seasonally adjusted figures show people are opting for the good deals being offered by building societies.”