The latest mortgage lending figures from the Bank of England show that the number of loans for house purchase rose by five per cent in July on the previous month.
July's mortgage lending of 50,123 loans marks a 50 per cent rise compared to the same time last year, when the mortgage market was experiencing a sharp downturn, but it is still considerably less than the 104,000 monthly average over the 10 years to the end of 2007.
Commenting on the figures, Paul Samter, economist at the Council of Mortgage Lenders (CML), said: "Activity still remains weak, but has improved from the historic low levels of turnover at the beginning of the year. We expect volatility in net lending levels over the rest of the year and there may be other months in which negative net lending occurs as the recovery is likely to be sporadic and shaky at first."
He added: "Overall however, the figures are consistent with our view of a slowly improving house purchase market, yet still constrained by a lack of available funding and the fragile economic backdrop."
The CML said that the negative net lending figure of -£418 for July is correlative with its forecast for this year.
Katie Tucker, technical manager at national mortgage brokers Mortgageforce, said that the figures from the Bank of England signify "good news", because boosting mortgage lending is "absolutely pivotal to the recovery of the UK property market."
But, she added that whilst banks and building societies are moving to increase the amount they lend again, specialist lenders – those who were responsible for the majority of sub prime and self-cert mortgage lending when the market was at its peak – are only lending one pound for every 14 they were lending in 2007.
"Most specialist lenders have moved into other businesses or closed down altogether, so we would be wrong to expect the housing market to return to its former health without a long fight," Ms Tucker said, as "an entire section of vital mortgage funding continues to struggle for a resurrection."
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