A report from Council of Mortgage Lenders of UK has revealed that gross mortgage lending grew to an estimated GBP32.4 billion in October, rising nearly 6% from GBP30.6 billion in September and GBP30.6 billion in October last year.

While the increase is higher than the 3% seasonal rise that might typically be expected between September and October, the figure predominantly reflects applications and approvals from before the mortgage market became affected by wholesale funding problems.

Council of Mortgage Lenders (CML) expect mortgage advances to be somewhat lower over the rest of the fourth quarter, reflecting the Bank of England’s data that shows mortgage approvals have declined during the third quarter.

Michael Coogan, director general of CML, 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.