Mortgage lending still booming

20 September 2006

Mortgage lending is still booming, according to new figures published by the Council of Mortgage Lenders (CML). It says total new lending hit a fresh record of £32.7 billion in August – that’s 7% up on July and 21% higher than a year ago.

These new figures seem to underpin recent data from both major mortgage lenders and the Bank of England, suggesting that the UK housing market remains strong, despite last month’s rise in interest rates.

Michael Coogan of the CML said: “In the coming months we expect to see a very similar picture, as demand remains strong and house prices continue to rise.” However, he warned that financial analysts are now expecting an increase in interest rates sometime between now and the middle of next year. Such a move would be likely to cool house price growth.

He said: “We forecast that house price growth and strength of demand will moderate as consumers anticipate higher rates.”

According to mortgage lenders the Halifax and Nationwide, house prices are now between 7% and 8% higher than a year ago. Last month, the Bank of England announced that mortgage approvals – seen as a very good indicator of housing market trends – were at their highest level of the year so far, and 24% higher than at the same time a year earlier.