The full impact of the rise in interest rates has yet to be felt by borrowers, the head of a major building society has warned.
The Yorkshire yesterday became the latest large mutual to reflect the housing boom by announcing record lending figures for 2004.
Gross advances rose by 14.5 per cent to £3.24 billion during the year.
But chief executive Iain Cornish warned that market conditions were getting tougher as the housing market cools.
"There is no question that 2005 will be a demanding year," he said.
"The house purchase market remains subdued and the full effects of the increases in Bank of England base rate have yet to be felt by borrowers."
Many homeowners still have annually adjusted mortgages which means that they will not have fully absorbed the five successive quarter-point rises in base rate between November 2003 and August 2004 when it reached 4.75 per cent.
The society's assets grew by 4.1 per cent to £15.03 billion, fuelled in part by a near doubling (plus-94.3 per cent) of its net savings flow which reached £375 million with the opening of more than 300,000 new accounts.
Members' savings balances grew by 7.3 per cent to £9.63 billion during the past year.
Operating profit rose by 5.3 per cent to £73.4 million and the management expenses ratio was pegged at 71p per £100 of assets for the fifth year running.