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Last Updated: Wednesday, 30 August 2006, 10:00 GMT 11:00 UK
UK mortgage lending rises sharply
For Sale signs
The buy-to-let market has boosted demand for mortgages
The strength of the property market has been highlighted by the latest mortgage figures from the Bank of England.

The number of new mortgages approved for house buying, but not yet lent, rose again in July to 120,000 - the highest level since the start of 2006.

Approvals have been rising steadily this year and are up 24% on a year ago.

Meanwhile the amount of money actually lent on new mortgages in July rose by 9.8bn, the second highest monthly increase on record.

The continued acceleration in the value of mortgage borrowing has helped to drive up the total amount of debt owed by individuals in the UK.

This rose by another 10.9bn in July, pushing the outstanding level of personal debt to 1.24 trillion.

The message is clearly that housing market activity remains very firm indeed
George Johns, Barclays Capital

However, other forms of borrowing by consumers are continuing to slow down.

The annual rate of growth of borrowing through methods such as credit cards, bank loans and hire purchase agreements, fell to 7.2%.

This was exactly half the growth rate recorded in December 2004.

Price predictions

Mortgage approvals are widely seen as a good indicator of future activity in the property market and suggest the current buoyancy of the market has a long way to run, despite the recent small rise in interest rates.

"With July's mortgage approvals tally rising to the highest since the beginning of the year and mortgage lending posting the largest monthly gain for nearly three years, the message is clearly that housing market activity remains very firm indeed," said George Johns, an economist at Barclays Capital.

Earlier this month the Royal Institution of Chartered Surveyors (RICS) predicted that house prices were likely to rise even faster in the coming months.

Its latest survey suggested that prices in July had been rising at their quickest rate for two years.

The number of enquiries from prospective buyers also rose, for the 14th month in a row.




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