Gross mortgage lending increased to the highest level since 2008, according to latest statistics released by the Council of Mortgage Lenders (CML).
Home loans worth an estimated £14.7 billion were issued to borrowers during May this year, up from £12.2 billion in April and 17% higher than reported in the same month last year.
Activity from mortgage borrowers has increased steadily over the past ten months since the Government launched its Funding for Lending Scheme, designed to encourage banks and building societies to lend money to households and non-financial companies.
Additional research by Moneyfacts.co.uk has highlighted how lower rates offered as a result of the scheme being introduced in August 2012 have boosted lending activity.
In August last year, total lending stood at £12.9 billion, whilst the average two-year fixed mortgage rate stood at 4.65%. Since then, the average rate on a two-year fixed mortgage has reduced to just 3.74%, whilst lending has risen to the £14.7 billion reported today.
Chief economist at the CML, Bob Pannell, said: "Funding conditions, helped by the Funding for Lending Scheme, continue to look favourable and are supporting more competitive mortgage pricing and availability and a gradual resumption of lenders' risk appetite."
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