Housing market remains strong

The Bank of England provided further evidence of the strength of the housing market when it today released May figures showing mortgage lending has continued to grow.

According to the bank's monthly figures on lending to individuals, mortgage lending increased by £4.2bn or 0.8% during May.

Simon Rubinsohn, an economist at stockbrokers Gerrard, said the increase showed the housing market remained "buoyant". He added the low level of interest rates meant that, despite the rise in house prices, property was still affordable - even in London.

The increase in lending during May was £400m higher than the rise seen in April, and 8.4% higher than it was a year ago.

The number of mortgages approved rose to 107,000 compared with an average of 98,000 for the three months to April, suggesting the increase in lending is set to continue into June.

The total value of all mortgages approved during May was £13.4bn, £1bn higher than the average for the three months to April.

Consumer confidence also remained strong during May with consumer credit, which includes personal loans and credit cards, increasing by £1.3bn. However, this increase was £400m less than the rise in April, although it was 11.7% higher than it had been 12 months ago.

Mr Rubinsohn said the high levels of credit were "slightly worrying", as an increase in interest rates, or a rise in unemployment, may mean people could no longer afford their borrowing. Total lending to individuals, including mortgages and personal loans, grew by £5.6bn, or 0.8%, during May.