UK mortgage lending has risen to record levels, in a sign that the recent house price boom is unlikely to run out of steam just yet.

Total borrowing by housebuyers jumped to a record of �21.8bn in July, 41% up on the same period last year, the Council of Mortgage Lenders said.

The number of borrowers for the month also set a new record, rising to 147,000.

The increase came as deteriorating economic prospects made imminent interest rate increases less likely, encouraging homebuyers to borrow.

But the council warned that slowing economic growth could affect the market further into the future.

World Cup effect

First-time buyer borrowed an average of �83,406 in July, while those moving onto their second property took out loans worth �89,769, the figures showed.

However, the CML said the surge in lending last month partly reflected pent-up demand for home loans after the Jubilee holiday and the World Cup curbed housebuying activity in June.

"Last month saw another set of buoyant lending figures, but the totals were inflated by activity deferred from June," CML head of research Bob Pannell said.

The CML added that while it expected the housing market to remain firm for the rest of the year, higher unemployment and slower income growth were likely to curb house price inflation in 2003.

"These highly favourable conditions cannot continue indefinitely," Mr Pannell said.

Borrowing to stabilise?

Separate figures from the Building Societies Association confirmed that demand for mortgages remained strong last month.

The BSA said its members advanced total home loans - including re-mortgaging - worth more than �3.5bn, up from �2.8bn in June.

And the latest estimates from the British Bankers Association, also out on Tuesday, put last month's rise in mortgage lending at �4.7bn, up from �4.1bn in June, but short of the �5.2bn increase recorded in May.

"Assessing June and July together suggests that the major banks' mortgage lending growth may be stabilising," BBA chief executive Ian Mullen said.