Tuesday, August 31, 1999 Published at 10:54 GMT 11:54 UK
Business: The Economy
Mortgage lending at record high
House prices are booming in southern England
Mortgage lending in the UK reached a record levels in July as the housing boom continued.
More than £3.4bn was lent on dwellings, and consumers borrowed another £1.3bn for purchases in the shops.
The figures are consistent with other data from the Nationwide Building Society, which show house prices rising by 9.8% year-on-year, and from the Building Societies Association, which showed a sharp rise in lending in July.
In just one year, net mortgage lending has increased by 50%, from £2.1bn in July 1998.
Total net lending shot up to £4.7bn in July, compared to £4.3bn in June.
Credit card lending is also accelerating, with £506m lent in July compared to £428m in June.
Bank rate concerns
The accelerating pace of house prices is fuelling a lending boom that is bound to worry the Bank of England as it considers interest rates.
It may have to consider reversing some of the seven interest rate cuts it has made since the autumn in order to the cool the housing boom, which seems to be concentrated in the south of England.
Many in the building industry, however, argue that the housing boom is just localised and temporary, and house price levels have not returned to the elevated levels of the late 1980s.
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