October high for mortgage lending

Mortgage lending rose to record levels in October, despite concerns over interest rate increases, the Bank of England said today.

Britons borrowed a record ?25.28bn. The figures fit in with those released by the Council of Mortgage Lenders and the British Bankers Association, both of which cited a record high.

The value of all home loans approved reached ?27.2bn in October, compared with a three month average up to September of ?25.6bn. A total of 117,000 loans were approved.

Philip Shaw, an economist at Investec, said: "It is not a great surprise that we have seen a new high in mortgage lending. What is surprising is that the new commitment figures are a lot weaker.

"That implies the housing market did not quite have the head of steam that we thought it did a month ago."

He added that November's increase in interest rates would have some effect on the market, but it was doubtful whether this would be enough for the Bank of England and rates were likely to continue to rise next year.

Borrowing by consumers showed signs of slowing down during October, with a total of ?17.37bn borrowed through credit cards, loans and overdrafts, down from ?17.63bn the previous month.

Strong repayments meant outstanding unsecured debt rose by just ?1.23bn - the lowest figure since March 2001. Within these figures people borrowed ?11.35bn on credit cards, down from ?11.4bn in September.

Outstanding credit card debt rose by ?665m during the month, compared with September's jump of ?765m, to leave people owing a total of ?168.12bn.