No lending crunch - yet!

Gross mortgage lending grew to an estimated £32.4 billion in October, rising nearly 6% from £30.6 billion in September and £30.6 billion in October last year, according to the latest data from the Council of Mortgage Lenders.

But the industry body cautions that while the increase is higher than the 3% seasonal rise that might typically be expected between September and October, the figure predominantly reflects applications made - and approvals given - before the mortgage market recently became affected by wholesale funding problems. Indeed, the CML expects mortgage advances to be 'somewhat lower' over the rest of the fourth quarter, reflecting Bank of England data showing mortgage approvals declining during the third quarter.

CML director general Michael Coogan commented: "The next few months will be a testing time as ongoing pressures in financial markets feed through into the wider economy. Funding constraints will continue to restrict lending activity and make loans more expensive.

"The Bank of England's recent Quarterly Inflation Report reinforced the likelihood of a reduction in rates early next year, and that should provide some relief for borrowers sooner rather than later."