Gross mortgage lending totalled an estimated £16 billion in July, the highest level in nine months, according to the Council of Mortgage Lenders (CML).
It represents a 26 per cent increase from June but is still 36 per cent down on the same month a year earlier, when 24.9 billion was lent
Despite suggesting a recent improvement in the market, activity remains subdued historically; it is the lowest July figure since 2001 and £11 billion lower than the July average over the previous seven years of £27 billion.
As had been expected, advances also picked up in June and July. The CML noted that a strong seasonal rise over the summer months was not unusual, with a rise in house purchase activity, rather than remortgaging activity, likely to have been the main driver behind the increase, particularly as low reversion rates continued to limit the attraction of refinancing.
However, CML economist, Paul Samter, warned that against the current economic back-drop, the improvement was limited in how far it could go. "We expect improved sentiment to support the market, but a further significant pick-up is unlikely with so many obstacles in place.
"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."
The CML said lending was consistent with its forecast for £145 billion in gross mortgage lending in 2009.
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