The Building Societies Association said net new mortgage commitments rose to pounds 3.287bn in May from pounds 3.142bn in the previous month and was 18 per cent above a year earlier.
The level of commitments is regarded as a forward-looking indicator of conditions in the housing market because it points to future trends in mortgage lending. However, it does not necessarily indicate a trend for house prices. Mortgage lending by banks, measured by the British Bankers' Association, rose 9 per cent to pounds 610m in May. The BBA said home loans were the only significant demand for lending by banks.
Yesterday's mortgage figures and consumer poll appear to contradict a consumer survey at the weekend, which warned that growth in consumer spending could be threatened by weakness in the housing market.
The Gallup consumer poll found 17 per cent of respondents expected their household financial position to improve during the next 12 months while 33 per cent predicted it would deteriorate. The negative balance of 16 per cent was the lowest since January and suggests that higher taxes have yet to undermine spending.
Gallup also found that respondents' impressions of the general economic situation and their views of likely jobless levels were similar to last month. It said the general message was that consumers remained cautious about the economy and a high level of confidence looked months away.
Bank of England figures showed that broad money supply M4 grew 5.3 per cent in the year to May, lower than in April. During the month M4 rose 0.3 per cent.Reuse content