Mortgage lending stays firm despite rate rises

The Council of Mortgage Lenders (CML) has said that mortgage lending is still rising at a "robust" rate, despite five increases in the cost of borrowing this past year.

Last month's lending was down slightly on June's figures, but it was still 13 per cent higher than a year ago and was a new record for any July.

The housing market historically cools during the summer period, so the CML cautioned that the full impact of rate rises would likely not become apparent until autumn.

"Lending is currently being fuelled by a large number of people remortgaging to better deals in case rates go any higher," a CML spokesman told the BBC.

This short-term spike in mortgages is unlikely to be followed by a downturn, however, as the threat of further interest rate hikes has now largely receded in the wake of last week's announcement that inflation fell below its target rate of two per cent.

Foreign and domestic housing market strains coupled with global stock market instability is also likely to ease pressures on the cost of borrowing, which will reassure homeowners with base-rate tracker mortgages.

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