MORTGAGE lending rose substantially in June, according to figures released by the Council of Mortgage Lenders.

Gross lending totalled a record £27.8bn, 15 per cent higher than the £24.1bn lent in May and 24 per cent higher than in June 2003.

Lending for house purchase reached its highest ever monthly figure of £13.6bn – 13 per cent higher than in May, and 40 per cent higher than in June last year. It accounted for 49 per cent of total lending, compared with 50 per cent the previous month and 43 per cent a year earlier.

Remortgaging also showed a significant rise, up 16 per cent on the month to £10.8bn in June from £9.3bn in May. Remortgaging was four per cent higher than in June 2003, when it totalled £10.4bn. It accounted for 39 per cent of total lending, compared with 38 per cent in May and 46 per cent in June last year.

House-buying is the primary driver of the increase in lending. Lending for house purchase has been growing as a share of total lending for the last 18 months. On a quarterly basis, lending for house purchase stood at 50 per cent in the second quarter of this year, its highest share since the fourth quarter of 2002.

The increase in house purchase activity is also reflected in the number of loans. There were an estimated 123,000 house purchase loans in June compared with 110,000 in May and 99,000 in June last year. This is the highest figure since October last year. The total number of loans for house purchase in the second quarter was estimated at 351,000, 25 per cent higher than the number in the same period last year.

CML director General Michael Coogan said: "The signals in the housing market are mixed at present. June saw a bounce back to record lending levels, with an especially strong resurgence in lending for house purchase.

"But however you look at it, in an environment of rising interest rates and rising house prices, there will come a point where affordability constraints mean that lending growth slows down.

“Early evidence from estate agency surveys suggests consumer appetite is already beginning to turn. But it may still be another few months before the lending surveys reflect this."