Gross mortgage lending increased to £34.2bn in June, up 9 per cent from May, but was still a lower monthly increase than in each of the last two years, shows the latest statistics from the Council of Mortgage Lenders.
Previous years saw June increase by 12 per cent in 2006 and 15 per cent in 2005.
The CML says it expects to see strong levels of lending continue, reflecting the growth in mortgage approvals over recent months and more borrowers exiting short term fixed-rate deals.
CML director general Michael Coogan says: “Despite the record level of mortgage lending, there are signs that the market is feeling the cumulative effects of the five interest rate rises we have seen over the past year. This effect will become much more evident in the coming months as borrowers with fixed-rate mortgages come off their existing deal into a significantly higher interest rate environment.
“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.”