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Record lending picks up after dip

21 August 2003
Mortgage lending and the consumer credit boom rebounded positively in July's, nearing previous highs, according to a latest study.

The Council of Mortgage Lenders reported that gross mortgage lending stood at £25 billion, up 12 per cent on the month before and 18 per cent up year on year.

Mortgage refinancing rose five per cent to £10.7 billion.

Separate figures from the British Bankers' Association showed net mortgage lending rose to £5.5 billion in July, up from £5 billion in June, with total lending at £12.2 billion in the month.

The Building Societies Association found total mortgage advances reach £4.24 billion in July, the highest level since August 1988.

Credit card lending rose £400 million, but demand for personal loans dropped off slightly.

However, minutes from the Bank of England's monetary policy committee found some members concerned over "indefinite" growth levels.

Minutes read: "The rapid growth rates of lending to individuals, which had helped to maintain consumption growth, could not be sustained indefinitely. There was a risk that households were extrapolating forward the unusually high rates of growth of real disposable income of recent years, and that consumers might not have fully appreciated that inflation would not reduce the real burden of debt as quickly as it had in the past."

Analysts said the MPC's decision to leave interest rates unchanged in August at 3.5 per cent, after the quarter point cut in July, reflected strong levels of consumer spending in the UK.