Trade body the Council of Mortgage Lenders (CML) has revealed that just 313,200 homeowners moved their mortgage to another lender or renewed their deal last year, down 23% on 2009.This compares with the 865,800 remortgages arranged in 2008.

The strength of the remortgaging market this year is likely to hinge on how soon and by how much interest rates move, and how competitive mortgage lending rates become.

Melanie Bien, director for independent mortgage broker Private Finance, said if mortgage borrowers become really concerned rates will rise it will push them into action.

“We’ve had a few false alarms in recent months, but a lot of people are on very cheap standard variable rates, so a bit of complacency has crept in with people forgetting how much a rate rise can hurt. Remortgaging fees are a consideration too and, if people don’t have to move, they are staying where they are,” she said.

Meanwhile, the home buyer market performed better than the remortgage market last year, with 529,300 borrowers taking out £77.1bn of loans – a jump of 11% by value against 2009.

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In 2010 as a whole, first-time buyer mortgage borrowers fell 1% against the previous year, but new buyers borrowed £23.3bn, a rise of 6% year-on-year. The market continues to suffer with just 14,500 loans to new buyers in December worth £1.7bn, down 42% on 2009.

The average first-time buyer in December 2010 had a deposit of 23%, up from 21% in November. They borrowed an average of 3.23 times their income and spent 12.9% of their income on interest payments, the lowest proportion since February 2004.

Lending to home movers also fell in December, down 33% by number and 29% by value from December 2009. Pre-Christmas home movers had deposits worth 22% of their properties, unchanged from November and spent an average of 9.5% of their income on interest payments, also unchanged from November.

Interest-only mortgage lending has also dropped substantially since 2007, particularly for first-time buyers. In December, only 6% of first-time buyer loans were interest only, against 30% pre-2007.

Michael Coogan, director general of the CML, said: “Access to funding for lenders is expected to stay under pressure this year, but it will now be matched by lower consumer demand due to the economic backdrop and a range of uncertainties which will impact the timing of borrowing decisions. We conclude that this will lead to gross lending levels in 2011 staying flat compared to 2010, with downside risks.”