According to the CML, borrowers are looking for greater security in terms of mortgages, making fixed-rate loans more attractive to prospective buyers. It claims the proportion of borrowers taking out a fixed-rate mortgage rose five per cent to 59 per cent compared with 54 per cent in March, the largest proportion since last December.

Gross lending was up eight per cent in April to £26.1 billion compared with £24.1 billion in March. And, while this was five per cent lower than in April 2007, the annual rate of decline was far below that recorded in recent months.

CML director general, Michael Coogan, commented: “Monthly house purchase lending volumes continue to be lower than last year’s levels and there will be a further weakening in coming months as recent approvals data has shown.

“The squeeze on mortgage funding has led many lenders to tighten their lending criteria. While tighter criteria make it more difficult for some borrowers to obtain a mortgage, they also reduce risk in a slower housing market.

“There has been a resurgence of fixed-rate lending as borrowers are seeking certainty. This trend is likely to continue as the anticipation of future Bank base rate cuts has diminished.”

Despite this, mortgage expert at Moneyfacts.co.uk, Darren Cook, has questioned whether those seeking security in two-year fixes are covering themselves sufficiently.

He said: “With fears of base rate increases, SWAP rates at over 6.3 per cent and rising, and lenders continuing to price more for risk, it is likely that mortgage rates will continue to follow suit. Under these uncertain times, many borrowers are looking to fix their mortgage payments and a five-year deal could become a preferred option rather than the popular two years.

“The current average rates for a two-year fixed deal stands at 6.68 per cent, which equates to a monthly repayment of £1,029.75 on a £150K repayment mortgage . In comparison, the average five-year fixed stands at 6.66 per cent, with a monthly repayment of £1,027.86.

“With the short- and medium-term economic outlook not looking too promising, homeowners are less likely to move home due to falling property values and banks lowering the maximum loan-to-values available. There is now new scope for a borrower to possibly take a more prudent approach to look past previously popular two-year deals and look for longer-term stability.”

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