Levels of remortgaging business have reached their lowest figure for five years - and are down 12% from last year, data from the Council of Mortgage Lenders reveals.

Figures for September show that remortgaging accounted for 30% of the market by value - the lowest figure since August 2001 and down from 42% in September last year.

Figures for the third quarter of this year reflect this trend, with remortgaging accounting for 31% of the market, compared to 39% in the third quarter of last year.

The CML said the sharp drop in remortgaging over recent months reflects the fact that lenders are managing to retain more customers for longer by reducing the incentive to remortgage to other lenders.

The number of people taking out fixed rate deals has also shown a sharp fall. While fixed rates maintained a 59% share of the market in September - unchanged from August - in the third quarter of this year they accounted for 60% of all loans, compared to 70% in the second quarter.

The fall in the take-up of fixed rates reflects that their pricing is becoming less attractive compared to variable rates, the CML said.

The average interest rate on a fixed rate mortgage reached 5.24% in September, up from 5.18% in August.

The number of loans to first-time buyers fell to 31,100 in September, from 35,200 in August. This is down from 34,700 in the same month last year.

Loans to home movers followed the same trend, falling from 66,100 loans in August to 56,700 loans. This is down slightly from the 57,300 loans to home movers in September 2005.

CML director-general Michael Coogan said: "The downward trends in remortgaging illustrate how lenders are reacting to competitive conditions, and offering attractive retention products and policies to their customers."

"Today's figures show that slowly but surely the market is cooling as we approach the end of the year in an environment of higher interest rates."

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