According to the Council of Mortgage Lenders (CML), a total of £34.2 billion was loaned last month, up three billion from the previous month. Despite gross mortgage lending reaching a record level in June, building society gross advances were down on comparison to figures from 2006.
Building society gross advances amounted to £4.650 million in June 2007, down from £5.136 million in June 2006, with net advances of £1.178 million in June 2007, versus £1.894 million in June 2006.
Brian Morris, head of savings policy at the BSA, said: “Although 2007 started strongly, it seems the impact of successive rate rises is now being felt. Typically, building societies are maintaining robust lending criteria and this is a possible explanation of the recent slowdown in building society lending.
“Borrowers should be careful about overstretching themselves at this time and take on new borrowing only if they are sure they can afford to service it.”
Michael Coogan, CML director-general, said: “Despite the record level of mortgage lending, there are signs that the market is feeling the cumulative effects of the five rate rises we have seen in the past year. This will become more evident as borrowers with fixed rate mortgages come off their existing deals into a significantly higher interest rate environment.
“While the markets still expect one more rate rise before the end of 2007, the Monetary Policy Committee should carefully assess the impact of past rises on inflationary pressures before it takes further action.”
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