Mortgage lending leaps as buyers rush to get ahead of rising rates

A rush to lock in low borrowing costs sparked the biggest rise in mortgage lending in eight months as the housing market defied rising interest rates and the cost-of-living crisis.

Net mortgage lending leapt to £7.4bn in May, up from £4.2bn the previous month, despite a jump in interest rates for borrowers, new Bank of England data showed.

Total mortgage approvals, an indicator for future borrowing, also held up much stronger than economists expected, rising slightly to 66,200 in May.

Economists said the figures could point to a scramble to benefit from lower mortgage rates as homeowners brace for the Bank of England to push up interest rates much further.

The data revealed that borrowers suffered the biggest six-month surge in mortgage rates in a decade. Average interest rates on a new mortgage have jumped almost 50 basis points in six months and rose a further 13 basis points in May to 1.95pc.

Tom Bill, head of UK residential research at Knight Frank, said: “With lenders withdrawing their cheapest products on a weekly basis, there is extra urgency to act sooner rather than later.”

Josie Dent, economist at the Center for Economics and Business Research, said some “home buyers may be rushing to buy a house now before mortgage rates rise again”.

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