Mortgage lending set new records in July as gross lending totalled £21.8 billion, an increase of 41% year-on-year, new CML figures have shown.
But although loans for house purchase and remortgaging both reached record levels, the latest monthly figures followed a quieter period in June during which lending was affected by both the jubilee celebrations and interest in the World Cup.
This may also have contributed to the setting of another record in July as the number of loans reached 147,000, the highest total since monthly records began in mid-1998.
With fears of interest rate rises receding, more than four in five borrowers (82%) opted for variable rate loans – the highest proportion since the mid-1990s.
The average first-time buyer borrowed £83,406 in July, representing 75% of the value of the property or 2.57 times income. Former owner-occupiers borrowed an average of £89,769, or 62% of the property's value and 2.38 times income.
CML head of research and analysis Bob Pannell says: “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.
“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 and high levels of employment. But these highly favourable conditions cannot continue indefinitely. A combination of factors - including higher unemployment, lower salary increases and an increase in National Insurance contributions - will alter consumer behaviour and engineer an easing back in the housing market.”