

Mortgage Lending At New High But Rate Hikes Start To Bite
Gross mortgage lending hit a record high in July, according to Council of Mortgage Lenders (CML) figures, but the Building Societies Association (BSA) warns that interest rate increases are starting to take effect.
The CML data for July revealed gross mortgage lending hit £34.4 billion, down one per cent on June but still a record for the month and 13 per cent higher than a year ago.
The body claims that mortgage lending is remaining "robust" despite the five interest rate hikes since last August, although the full impact of the increases is expected in coming months.
Data from the British Bankers' Association (BBA) also shows mortgage lending as being strong in July, although consumer credit remains weak.
The BBA figures show net mortgage lending rose by an underlying £5.7 billion, £0.3 billion over the June's level. Meanwhile, underlying credit card borrowing fell by £0.1 billion, while loans and overdrafts rose by £0.2 billion.
David Dooks, BBA director of statistics, said: "Longer-term trends in mortgage lending are little changed but July's strong rise was surprising, given the expected cumulative impact of higher interest rates.
"This resilience shows the popularity of home ownership and also reflects more remortgaging activity."
Research from the BSA, however, reveals a slightly different picture.
BSA figures for July show building society gross advances stood at £4.5 billion, down from £4.8 billion a year ago, while net advances were at £0.6 billion, against £1.7 billion last year.
Approvals in July stood at £4.0 billion, down from £5.5 billion in July last year.
Adrian Coles, director general of the BSA, said: "This is a tale of the five interest rate rises in the last year feeding through to the market.
"The strong start to the year has fallen away, with gross lending in July representing an 8.7 per cent decrease on gross advances a year before."
He went on to predict further squeezes on household finances as mortgage payments increase.
"Even if interest rates are near to their peak, potential borrowers need to think about all of their outgoings to make sure they do not overstretch themselves financially," Mr Coles added.
Commenting on the CML figures in particular, Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (Rics), predicted that the upheaval in the financial markets could have a knock-on effect for mortgage holders.
He said: "While the housing market still remains resilient, the turmoil in financial markets will push up mortgage costs for in vogue longer term fixed rate deals and will further slow the residential property market.
"With 90 per cent of borrowers opting for fixed rate security, those who are already financially stretched will find themselves paying a higher price for the added peace of mind. There is already evidence that lenders are becoming more discriminating in advancing loans to borrowers and this could be compounded by possible job losses in the City if the volatility persists."
Mr Rubinsohn added that the potential for lower bonuses in the financial services industry could also "cast a pall over the property market slowing price gains from their recent rapid pace".