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Mortgage brokers reported a surge in remortgaging this week as homeowners stepped up the search for cheaper deals, writes Simon Pincombe. But the new loan market remains lifeless, with turnover failing to match last year's levels.

"There are not many new purchases,'' said Ian Darby, a director of brokers John Charcol. Fears of further rate rises, coupled with forthcoming tax increases, are combining to keep buyers away. Some brokers estimate turnover to be about five to six per cent down on last year. The average variable rate mortgage remains at 8.44.per cent with the money markets indicating a steady but undramatic rise in rates. One-year money on the London interbank market was unchanged at 7.8 per cent yesterday with three- year and five-year money at 8.6 per cent and 8.8 per cent.

Simon Tyler of Chase de Vere Mortgage Brokers said: "We are still waiting for lenders to react to the last base rate rise.'' Brokers say the sudden surge in remortgage business owes much to the recent launch by Bradford and Bingley of a direct line mortgage service which offers a one per cent discount if you deal direct rather than go through one of the branches.

Other lenders, such as Bank of Scotland and Woolwich, have also raised the profile of their existing direct services .