Mortgage market continues to boom

There seems to be no let-up in the housing market

Mortgage lending and mortgage approvals in the UK are running at their highest level since 2003, the Bank of England has said.

The amount of money lent on new mortgages in October rose by £9.8bn, the strongest monthly rise since 2003.

Likewise, the number of new mortgages approved for house buying rose to 128,000, the highest level since December 2003.

The figures will add weight to the view that the housing market is growing.

'Watchful eye'

On today's figures, the housing market still has plenty of life Geoffrey Dicks, RBS

A plethora of housing market surveys have shown house prices rising at higher than forecast levels, despite the Bank of England choosing to raise interest rates in both August and November.

"As per last month, there is no discernible reaction to the August rate hike - rather the reverse," Geoffrey Dicks, chief economist at RBS, said.

"It is possible that borrowers were getting their borrowing sorted ahead of the expected November rate hike, in which case we might expect to see a slowdown in the coming months.

"But on today's figures, the housing market still has plenty of life," Mr Dicks added.

The strong lending and approvals figures could increase the chances of further interest rate hikes in the new year.

Phillip Shaw, economist at Investec, said that the bank's Monetary Policy Committee, which sets UK interest rates, would be keeping a "watchful eye" on the lending data.

On Thursday, the Nationwide will publish its housing market report for November.

This will be the first indication of how the market has reacted to this month's rise in interest rates from 4.75% to 5%.