Mortgage lending in the UK recorded a two per cent rise in September, further fuelling hope that the housing market could be on the road to recovery.
Figures from the Council of Mortgage Lenders (CML) show that lending totalled £12.5 billion last month, up from £12.3 billion in August.
Quarter on quarter figures also make for encouraging reading as lending rose by 18.9 per cent to £38.9 billion during the last three months, compared with the second quarter of the year.
A number of providers have reduced the rates of their mortgage products over the last month, with others launching increasingly competitive products, albeit overwhelmingly in the low loan-to-value bands.
"In line with the gradual thaw in funding markets, and brighter housing market prospects, new deals with less stringent criteria are gradually emerging. This is helpful for buyers with smaller deposits, and will help the market to transact a little more freely," Paul Samter, economist at the CML told Moneyfacts.co.uk
"Over the last few months, what we've seen is a year-on-year increase in house purchase lending, but a year-on-year fall in remortgaging – which is hardly surprising as many borrowers are enjoying low reversion rate trackers or standard variable rates as they roll off their previous deals."
However, lending is still well down on last year, falling by over a quarter (27 per cent) compared to September 2008. More must be done to make credit available to lenders and, thus, consumers if the green shoots are to be converted into a full market recovery, according to Mr. Samter.
"Lenders need to be able to access more funding, more cheaply, and with more certainty that it will remain in place (or replaceable) for a long period," he said.
"At present, there is still widespread caution in wholesale markets, retail funds are expensive to obtain, and there is uncertainty about what funding will be available after the Special Liquidity Scheme expires, all of which combine to mean a challenging funding market continuing now and for the foreseeable future – although it is gradually improving."
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