mortgage lending reached a new record during July amid speculation that people were continuing to withdraw high levels of equity from their homes, new figures show.

The Bank of England said a total of £22.46 billion was advanced during July while net lending, which strips out redemptions and repayments, also reached a new high of £7.78 billion.

The figures are in line with those from the British Bankers' Association and the Council of Mortgage Lenders, both of which also reported record mortgage lending during the month.

Simon Rubinsohn, chief economist at Gerrard, said: "There has been a pick-up from the lows in April, May time but I think what you also see is that the amount of lending is rising much more sharply than the transactions.

"That can lead to only one conclusion - that equity release is continuing apace."

He added the figures were for July, when there were still attractive fixed- rate deals available.

Many of these have now been withdrawn, suggesting equity release may slow down during August and September.

However, Mr Rubinsohn still expected people to have made record withdrawals of between £13 billion and £14 billion from their homes during the second and third quarters.

Approvals for new loans for buying a house remained strong at 111,000, up from 109,000 the previous month, and an average of 99,000 during the three months to the end of June.

Even when the number of working days in July were taken into account, approvals were still high at 102,000.

The total value of mortgage approvals for all types of loan was £25.68 billion, compared with June's record of £24.84 billion.

Tuesday September 2, 2003