U.K. Purchase Mortgages Seen Rising as Refinancing Plateaus

Home purchase mortgages in the United Kingdom continue to trend upward to their highest level in nearly two years while refinancing levels hold steady, the most recent data from the nation's industry trade group found. Monthly U.K. purchase loans were at 55,000 at last count in October, according to the Council of Mortgage Lenders, London. This is the highest level seen since December 2007. The number of monthly refinance loans this year has been at some of the lowest levels since the CML began tracking them in 2002. These were at 33,000 per month for the past two months. The only time since 2002 that monthly refinancing has been slower was in August of this year when the rate was 30,000. "We are still in a two-speed mortgage market. 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 ... purchase activity provide little incentive for borrowers to refinance their loans." Mr. Coogan said this, combined with tight lending guidelines, continues to constrain refinancing. Also declining in the United Kingdom have been fixed-rate mortgages. These peaked at 80% of the market in July but as of October had fallen to 66% of the market. Recently in the United Kingdom adjustable rates have been competitively low and there have been expectations that rates will remain at or near their current lows for the foreseeable future.