Mortgage lenders enjoyed their biggest month in July since last August, recording a total of £25bn in gross advances, despite house prices continuing to slow.
Of the £25bn total recorded by the Council of Mortgage Lenders (CML), £11.6bn (46%) was for house purchase, with remortgaging accounting for £10.7bn (43%).
Mark Mountney, managing director of intermediary Premier Mortgage Management said: ‘We all know that it is being driven by the underlying low interest rates and the implication is that if rates do bottom out, there is only one way for them to go.
‘We also know, from our own experiences, that there are people borrowing on forever greater income multipliers and if rates take an upward hike there has to be some concern. Is now the time to give some sort of affordability criteria for the market as a whole to adopt?’
Mirroring these fears, Michael Coogan, director general of the CML said: ‘We do not expect any shocks to the market that would cause serious problems. However, the current buoyant situation is not likely to continue indefinitely and we continue to expect house price inflation to slow down, looking ahead into next year. The risks of a correction have not gone away, and borrowers should remain wary of over-committing themselves.’
The July figures were up 12% on June and 18% on the year before.
Lenders believe the upwards trend will continue and Christine O’Grady spokeswoman at GMAC RFC commented: ‘We believe that the market will continue to grow albeit at a lower rate.’