Gross mortgage lending reached a new record of £34.2 billion in June - up from £31.4 billion in May - according to data from the Council of Mortgage Lenders...

This is due to seasonal effects and borrowers' response to higher interest rates. Although lending in June was up by 9% on May, this was a lower monthly increase for June than in each of the last two years (12% in 2006 and 15% in 2005).

As we move into the autumn, we expect to see strong levels of lending continue, reflecting the growth in mortgage approvals over recent months and more borrowers exiting short term fixed-rate deals.

But the mix of transactions is changing with our expectation being a higher percentage of remortgaging, to minimize potential payment shock, and lower numbers of house purchases as fewer people chose to move.

Housing market ‘holding up well’

Commenting, CML Director General Michael Coogan said: "Despite the record level of mortgage lending, there are signs that the market is feeling the cumulative effects of the five interest rate rises we have seen over the past year. This effect will become much more evident in the coming months as borrowers with fixed-rate mortgages come off their existing deal into a significantly higher interest rate environment.

"While the markets still expect one more interest rate rise before the end of the year, we believe the Monetary Policy Committee should carefully assess the impact of past rises on inflationary pressures before it takes further action. In the meantime, borrowers should be thinking seriously about how they will afford higher mortgage payments if they come out of a fixed-rate deal this year."

Warren Bright, chief executive of propertyfinder added:  “Strong mortgage data shows that the housing market has so far held up well in the face of higher interest rates, although the full effect is still to be felt.  Our forward looking survey data on the outlook for house prices shows that confidence is slipping, but from very high levels, suggesting a deceleration in house price growth rather than price falls are the most likely outcome. The housing market does not need any further interest rate increases.