Total gross lending in October reaches £27.5bn

Total gross lending in October reached £27.5bn – 8% higher than September&#39s £25.4bn and 31% higher than last October&#39s £21bn.

The Council of Mortgage Lenders&#39 monthly lending figures also shows that house purchases accounted for 47% of all lending at £12.9bn – up from £11.9bn in September and £10.4bn in October last year.

Remortgaging accounted for 44% of lending at £12bn, compared with £11.1bn in September and £8.5bn in October last year. Further advances accounted for 7% of lending at £1.8bn, up from £1.7bn in September and £1.5bn in October 2002.

The CML&#39s estimates for fixed and variable rate lending suggest a notable fall in the popularity of fixed rates during October. Fixed-rate lending fell to 34% of the total from 43% in September, but fixed rates are still much more popular than they were a year ago at 22% last October.

Fixed rate lending was on average more expensive in October than September, while variable rate lending was cheaper. But the average new fixed rate was still cheaper than the average new variable rate, at 4.09% compared to 4.20%.

First-time buyers accounted for only 27% of all loans for house purchase. They borrowed an average of 2.92 times their income and 89% of the property price in October. Movers borrowed an average of 2.8 times their income and 71% of the property price.

Michael Coogan, director-general of the CML, says: “Lending levels continue to confound expectations. We expect the recent resurgence in the housing market to result in high lending levels in November too, as people try to complete their moves before Christmas.

“The November rise in interest rates means that mortgage payments have risen for people with variable rates. Although further rate rises are not guaranteed, they seem likely, and consumers should borrow with caution. With Christmas just a month away the temptation may be to spend and borrow, but we would urge consumers to tread carefully as they may well face higher mortgage costs next year.”