Mortgage lending shot up 26 per cent in July compared to the previous month, sparking hope that the market has turned around.
Total mortgage lending for July reached £16billion, up from £12.7billion in June, according to the latest figures from the Council of Mortgage Lenders (CML).
But while the figures give some cause for celebration in the mortgage market, and offer hope to those trying to move onto or up the housing ladder, activity remains subdued in historic terms.
Compared to July 2008, when gross lending was at £24.9billion, last month's mortgage lending was still down 36 per cent, the CML's data shows, and is the lowest lending figure for July since 2001.
But, the sharp increase on last month's mortgage lending is the highest in nine months, and remains proof of "modest improvement in the market", following "an exceptionally weak winter" the CML says of the figures.
In June, CML figures showed that gross mortgage lending increased 17 per cent from May, to £12.3billion – almost half what it was in June 2008 following a 48 per cent drop.
Consistent with its forecast of £145billion for the year, the CML expected a seasonal increase in lending during June and July, but adds that the rise has also likely to have been driven by a rise in house purchase activity.
CML economist Paul Samter is careful about taking too much optimism from the statistics, commenting that "the bounce-back in activity from the extreme weakness around the turn of the year, coinciding with a seasonal bounce, is limited in how far it can go against the current back-drop.
"We expect improved sentiment to support the market, but a further significant pick-up is unlikely with so many obstacles in place," he added. "As a result, we anticipate some seasonal slowing in lending volumes and housing transactions over the latter part of the year and the picture of a slow but more stable market to emerge."
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