mortgage lending looks set to continue powering ahead in the coming months with a record number of loans approved during September, figures showed yesterday.

The British Bankers' Association said 292,800 mortgages worth £23.3 billion were approved during the month - 37 per cent higher than in September last year.

September was also a record month for advances, with total lending reaching a new high of £16.92 billion during the month.

But the figures increase the likelihood that the Bank of England's Monetary Policy will raise interest rates in November, as the record level of approvals suggests the housing market continues to remain buoyant.

David Page, an economist at Investec, said: "We might see another new high being set and that is something the Bank would be concerned about. The housing market is not slowing.

"It gives further stimulus to the hawks' concerns at the MPC."

The mortgage market continued to be driven by remortgaging and equity release loans during September, with the value of approvals for remortgaging 62 per cent higher than they had been during the same month of 2002, while the value of equity release ones was up by 41 per cent.

But at the same time the level of mortgages being taken out because people were buying a new property continued to recover.

Tuesday October 28, 2003