Gross mortgage lending climbed to pounds 11.5bn in July, up from pounds 10.8bn in the previous month and pounds 9.5bn a year ago, the Council of Mortgage Lenders said yesterday.
The housing industry attempted to damp down fears of an inflation "bubble", saying that there was no overheating outside some extremely localised "hot spots".
The mortgage rise figures, supported by data from building societies, banks and surveyors, came as separate statistics showed personal borrowing had also hit a record high.
Lending by building societies rose 11 per cent in July to its highest level for nearly three years, with mortgage loans reaching pounds 1.32bn, up from pounds 1.19bn in June and the highest since November 1996, the Building Societies Association said. Meanwhile, the main banks said total consumer demand for loans had exceeded pounds 2bn for the first time, while mortgage lending reached another monthly peak at pounds 1.36bn, 20 per cent up on June.
And more surveyors are reporting price rises than at any time since September 1988, the Royal Institution of Chartered Surveyors said.
On balance, 62 per cent of surveyors reported a rise in prices over the past three months, with the biggest increase on confidence was in the North of England - a sign that house price inflation is spreading outside the South-east.
Jonathan Loynes, an economist at the City investment bank HSBC, said the rise in house prices would be ringing alarm bells with the Bank of England committee that sets interest rates. "With house price inflation beginning to take off - the latest Halifax data shows prices up at their fastest rate since the Eighties boom - a wealth-induced burst of consumer spending is a real risk."
But Michael Coogan, the director-general of the lenders' council, said parallels between today's rising prices and the Eighties were "superficially understandable, but flawed". "Affordability remains remarkably strong. Our figures suggest no evidence of any underlying trend towards riskier behaviour by either borrowers or lenders," he said.
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