Worries over an imminent rise in interest rates are thought to be behind a big rise in mortgage lending last month.
Stats released by the Council of Mortgage Lenders (CML) show there was estimated gross lending of £22bn in July – a rise of 9% on June’s figure of £20.1bn and 14% up on a year before.
It is the highest monthly figure since gross lending hit £23.6bn in July 2008 – just before the financial crisis struck.
“Fears that the Bank of England was gearing up for an interest rate rise caused an uplift in remortgaging in July, as homeowners raced to refinance before the cost of borrowing began to tick up,” says John Eastgate, of OneSavings Bank.
“We’ve seen continued resilience in the buy-to-let market in spite of the tax changes announced in the budget, and this has underpinned wider lending growth.”
But Mr Eastgate adds: “It is not all plain sailing. House prices are still on an upward trajectory, which is doing nothing to take the sting out of entering the market for buyers.
“Unless serious commitments are made to build more homes, the supply deficit will continue to move the property ladder out of reach of those struggling to find a firm footing, causing greater long-term reliance on the private rental sector.”
CML economist Mohammad Jamei says: “We expect lending activity in the rest of the year to be underpinned by improving economic fundamentals, but kept in check as any upward pressure on house prices further stretches affordability for some buyers.”
The CML is an industry group made up of lenders that are collectively behind about 95% of residential mortgage lending in the UK.