Mortgage lending rose steeply in June, according to figures from the British Bankers' Association (BBA) yesterday.

The BBA said that underlying mortgage lending rose by £6.5 billion in June from the month before, the biggest gain since comparable records began in 1997 and a sharp pickup from a £5.1 billion increase in May.

The level is well above the recent monthly average of £5.7 billion, casting doubt on speculation that the booming housing market is slowing down and reinforcing expectations of another hike in interest rates next month.

The Council of Mortgage Lenders report, also out yesterday, showed a similar expansion in June. The CML said lending for house purchase reached its highest ever monthly figure of £13.6 billion - 13% higher than in May, and 40% higher than in June last year. It accounted for 49% of total lending, compared with 50% the previous month and 43% a year earlier.

However, CML Director General Michael Coogan said the upswing would not be maintained. "The signals in the housing market are mixed at present,” he said. “June saw a bounce back to record lending levels, with an especially strong resurgence in lending for house purchase.”

"But however you look at it, in an environment of rising interest rates and rising house prices, there will come a point where affordability constraints mean that lending growth slows down.”

“Early evidence from estate agency surveys suggests consumer appetite is already beginning to turn. But it may still be another few months before the lending surveys reflect this."

Remortgaging also showed a substantial though less dramatic rise, said the CML, up 16% on the month to £10.8 billion in June from £9.3 billion in May. Remortgaging was 4% higher than in June 2003, when it totalled £10.4 billion. It accounted for 39% of total lending, compared with 38% in May and 46% in June last year.