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The total amount lent to mortgage borrowers in October rocketed by 5% as more lenders offered more mortgages to more people.

According to the Council of Mortgage Lenders, October gross mortgage lending was an estimated £13.5bn, a 5% rise from £12.9bn in September. Admittedly, it was down 27% on £18.5bn in October 2008 but 5% is a big rise in a year when mortgage lending was truly in the doldrums.

The CML says this October outcome was in line with its forecast for gross lending of around £141bn for 2009 as a whole. It is confident that more will be lent in 2010 as more lenders begin easing criteria and house prices slowly continue to rise.

Paul Samter, economist at the CML says: "There has been a significant change in the type of lending taking place from the start of the year. House purchase activity has picked up significantly. In contrast, remortgaging has dropped to decade-low levels as many borrowers have little incentive to refinance when they move onto low reversion rates, and others find themselves unable to do so due to equity constraints.The coming months are likely to be dominated by seasonal factors rather than underlying change."

Susan Barclay, head of marketing at Scottish Provident says: "It is great to see that confidence is continuing to creep back into the UK mortgage market. However, in the excitement of securing their loan it is vital that borrowers do not leave themselves unprotected.

"This doesn't just mean taking out life cover, it is also important to protect against the financial impact of a serious illness especially as recent research shows that only 20% of those homeowners questioned have a critical illness plan. We urge anybody taking out a home loan to seek financial advice to avoid putting themselves and their loved ones at risk in the event the worst happens."

SOURCE: CML, Scottish Provident, 19/11/09

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