People are continuing to take out mortgages despite a recent interest rate increase, according to new figures.

The Bank of England said that 115,000 mortgages were issued in July, the same number as in June, even though it raised interest rates to a six year high of 5.75 per cent at the beginning of the month.

Alan Clarke, from banking firm BNP Paribas, told the Daily Telegraph: "Mortgage approvals continue to defy gravity. A correction is long overdue."

David Kuo, head of personal finance at money website Fool.co.uk, said the
figures made "uncomfortable reading" as the five rate increases since last August did not seem to have dissuaded people from spending, which could encourage the Bank to make further increases in order to keep inflation under control.

"The signs all point to more interest rate rises and once again it will be put-upon homeowners who will have to bear the brunt of higher borrowing costs," he argued.

However, Mr Kuo pointed out there are "promising signs that the housing market may be cooling" and suggested that mortgage holders overpay their loan as much as possible to avoid paying more interest than necessary.