Remortgaging contributing to record lending figures

Gross mortgage lending reached record levels last month on the back of high levels of remortgaging, the British Bankers' Association (BBA) has said.

While the £21.5 billion figure was the highest ever monthly rate, the year-on-year increase was below average, with the number of mortgages approved falling by eight per cent in comparison with figures from June 2006.

The average size of an approved house purchase loan rose by 16 per cent year-on-year, as borrowers became even more stretched in their efforts to get onto the property ladder.

"Although the trend in net mortgage lending is being maintained, approval numbers for house purchase are well down on this time last year, suggesting that market demand may be reacting to higher mortgage costs," added BBA director of statistics David Dooks.

"Significantly, the Royal Institute of Chartered Surveyors reported that buyer enquiries fell at the sharpest rate for 16 months in June, even before the latest interest rate hike in July had been enacted," added Howard Archer of Global Insight.



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