Mortgage lending in November was at its highest monthly level for nearly two years, according to new figures from the Bank of England.

The latest credit conditions survey from the Bank of England shows 60,518 new mortgages written in November 2009, the highest number of loans made to individuals in one month since March 2008.

November’s total net lending to individuals secured on dwellings rose by £1.5billion, a 4.85 per cent on October’s lending of £1.1billion, and more than double the previous six month average of £0.7billion.

Commenting on the rise in mortgages, Oliver Gilmartin, senior economist at the Royal Institute of Chartered Surveyors (RICS), said that the Bank of England’s figures support RICS’ view that there is “increasing momentum” in the housing market, and that this will drive an increase in house prices this year.

“Mortgage approvals have now been rising consistently for a year” he said, and the Bank of England’s survey suggests “a gradual improvement in the lending environment over the coming months.”

But Mr Gilmartin is wary of the consequences of a buoyant housing market, which he says will inevitably push up interest rates towards the second half of the year, and subsequently the cost of mortgages for borrowers.

He warned that even small increases in the base rate could cause significant rises in monthly repayments for those borrowers who opted for tracker mortgages, which have seen a drastic rise in popularity as homebuyers have sacrificed the security of fixed rate deals to cash in as interest rates languish at record lows.

© Fair Investment Company Ltd