Remortgaging was the main driver of the lending market in 2003.
Figures from the Council of Mortgage Lenders show gross remortgaging leapt by 50 per cent to £120.8bn from £80.6bn in 2002 while gross lending for purchases was up by only 3 per cent to £121.8bn from £118.2bn.
December was the only month in 2003 when lending for purchases passed the 50 per cent mark, reaching £12bn or 51 per cent of total lending. In April, it fell to 40 per cent of the total, the lowest level for 10 years.
Only 27 per cent of loans in December were to first-time buyers compared with an average of 29 per cent during 2003 and 38 per cent in 2002.
The CML says the Government has a tightrope to walk in terms of its housing policy. It points out that incentivising the development of long-term fixed rates to stabilise the market could reduce the availability of other special deals that are popular with borrowers.
Building Societies Association figures show gross advances reached £3.99bn last month, up from £3.39bn in December 2002. Net advances rose to £1.49bn from £1.12bn. Approvals fell to £3.62bn from £3.72bn.
CML director general Michael Coogan says: “In the run-up to David Miles' recommendations to the Chancellor on fixed-rate mortgages, it would be difficult to argue that the active remortgage market is a cause of detriment to most consumers. Indeed, it has enabled many to take advantage of better deals although most people are currently choosing variable rates.”