The property market has enjoyed an unexpectedly robust summer, figures showed yesterday, suggesting that the cost of borrowing might have to rise further before the full effect of a forecast housing slowdown takes effect.

Figures on mortgage approvals from the Bank of England showed that there were 115,000 new loans taken out in July, unchanged from the previous month despite the Bank raising rates that month to their highest level in six years.

Approvals figures are often seen as an early indicator of the direction of the housing market. Analysts said that mortgage demand had been slow to react to the five increases in rates over the past year.

In another unexpectedly strong figure, Nationwide reported that house prices rose by 0.6 per cent in August, up from 0.1 per cent in July.

That meant that the three-month rolling average rate was unchanged. However, the annual rate softened to 9.6 per cent from 9.9 per cent the month before.

Nationwide said that it expected the market to lose steam later this year and for house price growth to end the year in the middle of its forecast range of 5 to 8 per cent.

The building society said that the slowdown would be caused by weaker affordability, higher interest rates and lower expectations of house price growth.

Fionnuala Earley, Nationwide’s chief economist, said: “While it has taken some time for these factors to bite, there are now clearer signs of slower demand in the market reflected in the collapse in new buyer enquiries.

“In addition, the stock-to-sales ratio, which leads house price inflation by five to seven months, predicts a continued slowing in the annual rate of house price inflation.”

Vicky Redwood, of Capital Economics, said: “The fact that mortgage demand remains strong for now no doubt explains why house price inflation has so far softened only slightly.”

The research group said that prices had lost momentum since the start of the year and would continue to soften gradually throughout the year.

In July, mortgage-holders who were following the City consensus view would have expected the Bank of England’s Monetary Policy Committee (MPC) to raise interest rates to 6 per cent, pushing up the cost of their loans even further.

Although an immediate increase is now thought to be unlikely, borrowing costs could rise anyway as a result of the worldwide liquidity drought that has sharply pushed up the cost of interbank lending.

Oliver Gilmartin, senior economist at the Royal Institution of Chartered Surveyors, said: “The stronger mortgage lending data will add weight to those on the MPC who believe that another interest rates rise may be necessary before year end.

“However, volatility in credit and financial markets will remain the key determinant for the rate-setting committee going into the winter period.”

Other figures from the Bank showed a strengthening in unsecured lending. Consumers borrowed £1.1 billion in bank loans, overdrafts and on credit cards in July, the highest figure since last November.

Borrowing on credit cards, in particular, rose at a much faster pace than the recent average.

Ross Walker, of RBS, said: “UK households’ appetite for borrowing remains remarkably resilient.

“The full effects of the monetary policy tightening over the past year have yet to be felt, and any additional increases in funding costs resulting from the credit market fallout have yet to register.”