Mortgage Lending Hits Record High

A report by the Council of Mortgage Lenders (CML) shows that gross mortgage lending rose by 7.2 per cent from July and by 21 per cent compared with August 2005.

The August 2006 total is significantly higher than the previous lending record of £32.4 billion set in June this year. UK mortgage lending has reached record levels in ten out of the past 12 months.

CML director general, Michael Coogan, commented: "Record lending in August reflects the rise in mortgage approvals during the early summer combined with increasing house prices. The strength of the London market is also a factor - with property values and mortgage sizes substantially higher than in other parts of the country."

Mr Coogan predicts that lending over the coming months will remain relatively steady, with high levels of demand and house prices rises continuing.

However, he also pointed out that a forecast increase in interest rates by the Bank of England from the current 4.75 per cent before the end of the year is likely to moderate house price growth and strength of demand.

Data from the British Bankers' Association (BBA) indicates that total net mortgage lending amongst the major British banking groups rose by an underlying £6.2 billion during August this year, £0.4 billion higher than the £5.8 billion rise the previous month.