Slight recovery in mortgage lending

Mortgage lending increased slightly during July but remained well down on the level recorded a year ago, figures showed today.

A total of £24.8 billion was advanced during the month, 5 per cent more than during June and the highest figure since April, according to the Council of Mortgage Lenders.

But lending volumes were still 27 per cent lower than they were in July 2007 as the combination of the credit crunch and house price falls continued to take their toll on the market.

Meanwhile the Bank of England revealed today that an interest rate increase was ruled out this month because of the risk that it might make the economic downturn "unnecessarily deep".

Monetary Policy Committee (MPC) member Tim Besley voted to increase the cost of borrowing by 0.25 per cent to 5.25 per cent, minutes of this month's meeting showed. It was the second month in a row he argued for a rate hike.

But seven members chose to keep rate steady at 5 per cent, saying that despite the fact that the economic outlook had continued to worsen, it was the best policy to bring inflation back to its 2 per cent target.

The other committee member, David Blanchflower, voted for a rate cut.