Mortgage lending on the up

MORTGAGE lending rose again last month - a worrying sign that higher interest rates are failing to deter consumers from piling on debt.

High Street banks dished out £5.7bn in new home loans, down from June's £6.4bn but in line with the monthly average of £5.8bn, according to figures from the British Bankers' Association.

'Following some volatility in May and June, the major banks' lending was close to trend in July,' said BBA executive director Roger Brown.

The Bank of England has raised interest rates five times since November in a bid to cool the housing and credit booms. Today's figures suggest that people are borrowing regardless.

Demand for loans and overdrafts slowed sharply, however, rising by £216m in July against June's £630m. Borrowing on credit cards rose by £529m.

Consumers' appetite for debt was confirmed by separate figures from the Building Societies Association. These showed £2.2bn worth of new home loans in July against £1.6bn in June.

BSA director-general Adrian Coles said July's figure may have been boosted by remortgaging. 'With interest rates rising, people may be starting to fix their mortgages in order to gain certainty on their repayments,' he said.

Useful links