Despite the desire to switch to a new fixed rate or even to a tracker away from a standard variable rate, unless there is a substantial amount of equity or a large deposit to be made with the deal then many will find themselves shut out of what is available. Lending is thought to remain constrained through the rest of the year as consumers adjust to the VAT increase, inflation increases, and public spending cuts by government. They are trying to keep their borrowers as safe and assure that any lending is likely to be repaid and suffer as few defaults as possible.

Not only is lending constrained but remortgage deals have greatly changed in just the past few weeks. As news that remortgages were on the rise and homeowners were seeking changes, lenders pulled their best deals on fixed rates. Competitive deals were no longer necessary to get homeowners to seek a new deal, now the warning of a rate increase is pushing them to move away from their current lenders. This too will have the effect of bringing more and more homeowners out to shop for deals. Whether the lack of competitive fixed rate deals and still rigid lending will hinder the increase pattern of remortgages is left to be seen, but no doubt there will be a ripple effect from the two.

Brian Murphy, head of lending, UK-wide independent mortgage broker, Mortgage Advice Bureau, said: "The increase in mortgage applications, albeit from very low levels, has been helped by a renewed appetite by lenders to lend. However, the majority of products on the market are at LTVs below 75%, which means applicants will still need to be putting up substantial deposits to secure mortgage finance.

"But it is a step in the right direction, with almost 50% more mortgage products on the market at the end of 2010 than were available at the beginning of the year.

"Unfortunately, mortgage product availability remains constrained at higher loan to values and this is certainly hampering a full blown recovery. Lenders also continue to be extremely cautious with regards to who they lend to, and we don’t expect to see any relaxation of lending criteria anytime soon.

"With national property prices effectively at the same level at the end of 2010 as they were at the end of 2009, and the forecasts for a flat or slight reduction in overall prices in 2011 due to concerns around public sector employment prospects, consumer confidence at a lower ebb and a limited amount of property coming onto the market, 2011 will be another challenging year for the mortgage market.

"Having witnessed a slightly more active month in November than might have been anticipated, the mortgage market during December went into something of a mini hibernation period in the second half of the month.

"This was a consequence of both the seasonal festive break and the near arctic conditions effectively shutting down large swathes of the country. In spite of this, activity levels were only down around 6% compared to December 2009, when buyers were rushing to beat the end of the Stamp Duty holiday.

"During December, those buyers who did venture into the house purchase market borrowed slightly larger mortgages and at slightly higher loan to values than those in November. There was also a further migration by buyers away from variable rate products, with more than 70% of applicants choosing fixed rate products.

"With average rates on two and five-year fixed deals edging up slightly in December compared to November, and with comments from organisations including the Confederation of British Industry (CBI) that they expect interest rates to start to rise possibly as early as the second quarter of 2011, it is not surprising to see that active buyers are taking advantage of some terrific fixed rate deals rather than playing a wait-and-see game."