Gross mortgage lending has hit a new record, according to data from the Council of Mortgage Lenders (CML).
An incredible £34.2 billion was lent in June alone, which is a 9% increase from May’s figure of £31.4 billion. The rise is apparently due to seasonal effects and borrowers’ response to higher interest rates.
Despite this, data indicates that this was in fact a lower monthly increase for June than in each of the last two years.
This trend is expected to continue as autumn approaches as more mortgages are approved and the number of borrowers exiting short term fixed-rate deals increases.
CML Director General Michael Coogan comments: "While the markets still expect one more interest rate rise before the end of the year, we believe the Monetary Policy Committee should carefully assess the impact of past rises on inflationary pressures before it takes further action. In the meantime, borrowers should be thinking seriously about how they will afford higher mortgage payments if they come out of a fixed-rate deal this year."
According to RICS senior economist, Oliver Gilmartin, the continuing rise in longer term borrowing will impact on the costs of fixed rate mortgage deals consequently affecting borrows in the run up to the winter period.
“With less than 50% of the increase in base rates over the past year being passed onto mortgage borrowers (via the effective mortgage rate) it is not surprising that mortgage lending has remained so strong during the seasonally strong summer months. Record borrowing levels will only add to the concerns at the Bank of England that higher interest rates will be necessary to curb consumers’ appetite for debt.”
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