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Signs of improvement in property loans market but still way below peak

The number of mortgages available has increased for the third month in a row giving property buyers more choice but it is still way below the 30,000 available in August 2007 at the peak of the market, according to research from

‘This is good news for buyers, as passing the 2,500 barrier does suggest that those looking for a mortgage are finding more and more choice and where there is choice, there is competition,’ said Hannah-Mercedes Skenfield, mortgages channel manager at the price comparison website.

‘This is also now the third successive month on month growth of available products, which suggests the increases are sustainable. But we are clearly a long way short of a full recovery but we are at least moving in the right direction,’ she added.  The recent increase is partly down to Halifax launching new rates for existing customers.

But according to housing intelligent group Hometrack, lenders are shunning the remortgage market and the situation is unlikely to change until 2011. Lenders have been focusing their attention on house purchase lending, in some cases because they have government targets to hit, said strategy, risk and economics director, Gary Styles.

In addition, remortgaging activity has plummeted as low interest rates encourage borrowers coming to the end of fixed deals to stick with their lenders’ relatively attractive reversion rates, he explained.

And the latest figures from the Council of Mortgage Lenders (CML) confirmed that last month the number of remortgages sanctioned declined 6% on the previous month and 39% year-on-year, to 31,000.

‘With refinancing still unattractive or unnecessary for many borrowers due to continuing low rates, we are now seeing a much more house purchase-focused market, a profile much more like the beginning of the Noughties than its latter years,’ said CML director general, Michael Coogan.

And research shows a steep rise in reported mortgage fraud. During 2009 mortgage fraud accounted for 18% of all reported fraud and 27% of fraud in the UK finance and insurance sector, according to accounting firm BDO.

‘It may have become more difficult for the person on the street to secure a mortgage in the UK, but the mortgage fraud industry is booming,’ said spokesman Simon Bevan.
‘These frauds typically work through a large loan being taken out on an overvalued property, with a crooked buyer in collusion with a corrupt valuer and/or lawyer,’ he explained.

Consequently the frauds can be large, as the same team will work on a succession of properties, he added.