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Strength of remortgaging hides slowdown in sales

Gross mortgage lending by banks and building societies fell to £13bn in January from £13.6bn the previous month, according to the Council of Mortgage Lenders.

But the figures, produced with the Department of Tran-sport, Local Government and the Regions, show that despite the usual post-Christmas decline, the value of mortgage completions was higher than the £9.5bn achieved in January 2001, mainly because of the strength of remortgaging.

Loans for house purchase totalled £6.4bn compared with £8.5bn in December 2001 and £5.4bn in January 2001. Remortgaging increased to £5.4bn from £4.2bn from the previous month and £3.6bn a year ago.

After a five-month fall in average interest rates, January saw rates edge up to 4.71 per cent from 4.63 per cent in December. The average variable rate was 4.4 per cent and average fixed rate was 5.12 per cent.

The proportion of loans taken out at fixed rates rose to 43 per cent from 32 per cent, the highest for two years.

CML head of research and analysis Bob Pannell says: “Our initial estimates point to record levels of remortgaging activity and therefore may exaggerate any slowdown in lending for house purchase. However, supply shortage may have contributed to the buoyancy of house prices in recent months and this is making market conditions difficult for first-time buyers in some areas.”

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