Mortgage lending reaches record high

Mortgage lending soared to new levels in July as borrowers continued to take advantage of low interest rates.

Gross lending amounted to ?21.8bn, an increase of 41% since July last year, and the number of loans reached 147,000, the highest total since monthly records began in mid-1998.

Lending had been down in June, but the Council of Mortgage Lenders, who released today's figures, put this down to the jubilee celebrations and interest in the World Cup.

"Last month saw another set of buoyant lending figures, but the totals were inflated by activity deferred from June which fed through into July's figures," said CML's head of research and analysis, Bob Pannell. "The buoyant conditions in housing and lending markets are likely to persist for much of the rest of 2002, as households continue to enjoy low interest rates ands high levels of employment."

However, Mr Pannell added that higher unemployment, lower salary increases and an in increase in national insurance contributions next year are all likely to contribute to a slowdown in the housing market.

The number of loans taken out by first-time buyers increased from June, although the percentage as a total of the loans taken out fell from 44% of all loans to 38% in July. The average first-time buyer borrowed ?83,406, representing 75% of the value of the property or 2.57 times income.