British mortgage lending shot up at a record pace in June, casting doubt on speculation that the UK's booming housing market is slowing down and reinforcing expectations of another hike in interest rates next month.

The British Bankers' Association said underlying mortgage lending rose by £6.5 billion (€9.75 billion) in June from the month before, the biggest gain since comparable records began in 1997 and a sharp pick-up from a £5.1 billion increase in May.

The data would seem to run against a survey released earlier yesterday that suggested the housing market may be cooling.

The figures suggest that Britons are paying little heed to Bank of England governor Mr Mervyn King's warning last month that homebuyers should beware of taking out large mortgages on the assumption that borrowing costs or house prices are a one-way bet.

"Rates need to get significantly above 4.5 per cent in order to reduce the rate of household borrowing toward the rate of incomes growth," said Mr Mike Taylor, economist at Merrill Lynch in London. "We expect the monetary policy committee to raise rates by 25 basis points to 4.75 per cent at the August 5th meeting."

Figures from the Building Societies Association showed approvals for new mortgages remained high last month, pointing to further strong mortgage lending in the months ahead as those transactions are completed. The association said seasonally adjusted mortgage approvals - loans agreed but not yet made - rose to £4.27 billion in June, up from £4.23 billion in May and sharply higher than the £3.4 billion one year ago.

However, the Royal Institute of Chartered Surveyors said house price inflation slowed to its weakest rate in 10 months in the three months to June. Prices in London and the southeast, which tend to lead trends, fell for the first time since the start of the Iraq war, it said.