Record numbers take advantage of cheap mortgages

A record 10,000 people a day are taking out a mortgage in order to grab a slice of cheap finance before interest rates start to rise, figures showed yesterday.

A record 10,000 people a day are taking out a mortgage in order to grab a slice of cheap finance before interest rates start to rise, figures showed yesterday.

The major high street banks said they approved 292,800 mortgage loans for a total value of £23.3bn in September, the highest monthly figures and almost 40 per cent higher than the same month a year ago.

The average loan has surged by 29 per cent over the past year, even though prices are now rising at less than 20 per cent a year.

The British Bankers' Association said the strongest rise was in demand for loans for house purchase, rather than simply remortgaging.

Loans to buy a new home jumped from £10.99bn in August to £12.45bn in September, a 13 per cent rise on the month and up 79 per cent over the past year.

The value of approvals for remortgaging is 62 per cent higher than a year ago, while the value of equity release ones is up 41 per cent. Mortgage approvals are an indicator of the future direction of the market.

"The continued buoyancy of the mortgage market is clear to see in September's lending figures and the strength of approvals means that this is expected to continue in the near term," said David Dooks, BBA's director of statistics.

September was also a record month for advances - the loan of money for the actual sale - with total lending reaching £16.92bn.

This renewed vigour has alarmed the Bank of England's Monetary Policy Committee. Earlier this month four of its nine members called for a rate rise to dampen down consumer borrowing. Many analysts believe the Bank will raise base rates next month, which will push borrowing costs up.