June's mortgage approvals highest this year

Further evidence of the housing market's robust health emerged today when the Bank of England said the number of mortgage approvals in June was at the highest level since the start of the year.

The Bank's latest report on lending to consumers showed that the number of mortgage approvals for house purchases in June - loans agreed but not yet made - jumped to 120,000. The average figure for the previous six months was 116,000.

This is the latest piece of data pointing to a new surge in activity in the housing market. Just last week, data from the British Bankers' Association also showed a rise in the number of mortgage approvals for June.

Today property research group Hometrack said house prices were rising at the highest rate for almost two years, while a July survey by the Royal Institution of Chartered Surveyors said house prices in the capital were rising at the fastest pace for six years.

Howard Archer, chief economist at Global Insight, said: "The robust Bank of England mortgage data for June confirms that housing-market activity has perked up again after showing some signs of faltering around April. This suggests that house prices could spike higher in the near term, after recently showing some signs of losing momentum.

"A shortage of properties in some areas may also boost prices, particularly in London and the south-east, where it is notable that house-price rises have been much more marked than elsewhere in the country."

The Bank's monetary policy committee meets this week and is expected to leave interest rates unchanged at 4.5%. But pressure is growing on the MPC to increase the cost of borrowing: house prices appear to be rising and inflation spiked last month to 2.5% - the highest level since Labour came to office nine years ago.

The Bank also said that total mortgage-lending rose by just over £9bn in June while consumer credit rose by £810m last month. But credit card lending saw the weakest rise since October 1994, increasing by only £43m.