Mortgage lending remained robust last month as the housing market’s summer resurgence showed little sign of cooling, figures showed today.
The British Bankers’ Association (BBA) said net mortgage lending in July rose by £5.7 billion, up on June’s rise of £5.6 billion and above the average £5.3 billion rise over the last six months.
Separate figures from the Council of Mortgage Lenders (CML) said gross mortgage lending reached £30.4 billion in July - the strongest July on record. June was also a monthly record.
Lending in July was 6 per cent below the £32.4 billion of lending in June, but 19 per cent higher than the £25.5 billion of lending in the same month last year, it said.
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David Dooks, BBA director of statistics, said: “The robust nature of mortgage lending continues, with recent monthly net increases not far short of the movements seen when lending peaked in 2003/4.”
The figures could increase pressure on the Bank of England to hike rates to keep the property market in check. The market’s summer resurgence was cited by the Bank when it outlined the case for its hike in the cost of borrowing this month.
The Bank’s own data has shown there remains a strong appetite for debt among borrowers. But today’s figures cover the month before interest rates rose to 4.75 per cent.
Mr Dooks said: “With financial markets suggesting the possibility of at least one more rate rise before the end of the year, we expect to see more subdued lending over the coming months.”
The case for a rates hike was also strengthened by figures on money supply. The Bank’s broad M4 measure today showed very high growth of 13.1 per cent in July, compared with the same month last year, down a shade from June’s 13.5 per cent.
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Philip Shaw, the Investec economist, said: “Given the Bank of England’s concerns over rapid broad money growth, markets should not ignore this indicator any more.”