Households' appetite for home buying and high-street spending showed no sign of abating, according to new surveys yesterday pointing to a consumer boom.
Mortgage lending rose in July by its biggest amount for almost three years while retailers said their sales grew at the fastest rate for 20 months this month despite the rise in interest rates.
The data added to fears in the City that the Bank of England will raise rates again, possibly as soon as November
The Bank published figures yesterday showing that mortgage lending rose by £9.79bn last month, the biggest increase since September 2003 and above the City forecast of £9.2bn.
The number of approvals for new loans, which points to house prices over the coming months, rose to 120,000 in July from 119,000 in June and the highest since January.
Unsecured lending also grew more than expected. The Bank said consumer credit rose £1.12bn last month, up from £833m in June and higher than analysts' forecasts of a £1bn increase.
Economists said the data showed the continued strength of the housing market, which was cited as a reason for this month's rate rise.
"The data as a whole suggest that the household sector's appetite for borrowing, having never been weak, was strengthening ahead of the August rate hike," Allan Monks, the US economist at JP Morgan, said.
However, Peter Newland at Lehman Brothers said: "It remains to be seen what impact the August hike will have on the demand for mortgage products. We expect approvals to slow in the second half of the year, resulting in less upward pressure on house prices."Reuse content