Gross mortgage lending reached an estimated £22 billion in July, according to the Council of Mortgage Lenders (CML).
This is 9% higher than June (£20.1 billion), 14% higher than July last year (£19.4 billion) and the highest monthly figure since gross lending reached £23.6 billion in July 2008.
Mohammad Jamei, CML economist, said: “At £22 billion, our estimate of gross lending in July is the highest monthly total for seven years, but is in line with our expectation that lending would strengthen in the second half following subdued activity earlier in the year.
“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.
“Today’s data is in line with our forecast that gross lending will rise to £209 billion this year, 3% higher than in 2014.”
Andy Knee, chief executive of LMS, said: “The mortgage market hit a seven year high in July – a massive boost to confidence in the sector – with homeowners being spurred by competition among lenders and a greater choice of products to purchase now and fix while these lower mortgage rates are still on offer.
“However, an improving UK economy is failing to filter down to many families who still feel the pinch month-to-month. But for those who can save enough for a deposit, the vast majority of lenders continue to offer record low rates. The improved affordability of mortgages – despite crucial supply issues UK-wide and concern about rising house prices – can help to reduce the pressures on struggling households.
“Greater speculation and rumours of an interest rate rise occurring in the not-too-distant future will play a part in compelling borrowers to purchase now before mortgage costs rise. We anticipate steady levels of activity throughout the second half of 2015, both in terms of mortgaging and remortgaging. Whether or not a rate occurs early next year, now offers a prime time to take advantage of lender appetite and search for the best deals on offer.
“When interest rates do rise, however gradually this happens, households will see lenders raise mortgage rates and their monthly payments increase.”
