CML: Gross lending up 29pc year-on-year

Compared to the previous month estimated gross lending rose by 12% from £14.8bn representing the highest monthly estimate for gross lending since October 2008 which reached £18.6bn.

The CML’s market and data analyst Caroline Purdey said: “An improvement in sentiment and activity continues to show in the UK housing and mortgage markets with a more positive picture also starting to emerge in the economy.

"Our forward estimate of gross mortgage lending in July reinforces a growing evidence base of a strengthening in the housing and mortgage markets."

Richard Sexton, director of e.surv chartered surveyors, said: “The mortgage market has been the pillar of the economic recovery. The freeze on high loan to value mortgages has thawed and first-time buyer lending is at its highest since the banking crisis.

“Rates are at record lows and there are wider range of deals for borrowers to choose from than at any point since 2008.”

Sexton said this was not surprising as the mortgage market had received much more help and attention from the government than other areas of the economy.

Brian Murphy, head of lending at Mortgage Advice Bureau, said: “Additional funding through government initiatives has caused lenders to compete for business in order to catch ambitious lending targets. Since the start of the Funding for Lending Scheme rates have fallen by one percentage point across 2, 3 and 5-year fixes. The market is certainly ripe for picking with the best choice of products and deals for years.

“Investing time to weigh up the options can really pay off in the long term”

Mark Harris, chief executive of mortgage broker SPF Private Clients, added: “Increased confidence among buyers, with regard to their ability to get funding at competitive rates, is persuading more people to take the plunge and get on the housing ladder for the first time or move up it.

“Help to Buy, Funding for Lending and more recently the Bank of England's Forward Guidance are all contributing to boost confidence in the market.”

But Harris warned that conditions in the wider market; poor returns on cash, an influx of buy-to-let investors and government schemes to assist homebuyers, were in danger of creating a housing bubble.

And Duncan Kreeger, director of West One Loans, said: “This is just a brief morsel of comfort for those trying to squeeze support from traditional lenders. But it is important – it demonstrates how mainstream finance has made no progress at all for half a decade.

"In fact things have gone backwards. This is 12% worse than the average monthly figure for 2008, so the big banks aren’t even treading water. Given that these very same lenders have already received more than £16 billion from Funding for Lending, a bigger total for July wouldn’t have been unreasonable.

“With high street lending going backwards, it’s no surprise individuals and businesses alike are turning to alternative finance. Especially given the high street’s nervous approach – lending only to the plainest, risk-free projects. Meanwhile, we’re seeing milestone after milestone whizz by. And with mainstream banks still stuck in their old ways, shedding market share as they go, this is only set to continue.”

Paul Hunt, managing director of Phoebus Software added: “It’s clear the rejuvenated mortgage market is gaining strength month by month and there’s been a pick-up in confidence in the property sector, now that the economy is out of the bad lands. Optimism is growing rapidly as gross mortgage lending is up by 12.6%, and has grown substantially to the highest level we’ve seen since October 2008.

"And first-time buyer lending is at its highest since the banking crisis. The Funding for Lending scheme has worked wonders in supporting mortgage availability and has boosted cheaper funding as banks and building societies have been able to lower their costs. At the same time Help to Buy has emerged as another incentive for banks to increase high LTV lending even more. Mortgage rates are at record lows and lenders have helped transform conditions for a range of buyers thanks to their proactive approach to lending.”

Simon Crone, vice-president commercial – mortgage insurance Europe at Genworth, said: “The fact that gross mortgage lending in July was 12% higher than June and 29% higher than the equivalent month last year certainly shows that things are heading in the right direction and that the gradual market recovery is continuing.

"However, amid all the excitement, it’s worth remembering that the figures are improving from a historically modest base and that we are still some way short of the activity levels witnessed before the global financial crisis. While it is encouraging that lenders and borrowers are regaining some of the confidence that was eroded over the past few years, it is also worth bearing in mind that mortgage activity is still being artificially supported by initiatives such as the Funding for Lending scheme.

"When we are witnessing these kind of figures without ongoing state support is when there will be real cause for celebration. It is heartening that more first-time buyers are able to realise their property aspirations, but we must continue to ensure lenders are providing a steady supply of higher LTV mortgages rather than relying on factors such as familial assistance.”

Ben Thompson, MD, Legal & General Mortgage Club, added: “At the moment it seems that the only way is up for housing market. Following government stimulus we have now seen increasing house prices, much needed plans in place to increase the number of homes being built in the UK and now positive figures showing that gross mortgage lending is up 29% on July 2012. Its crucial that at every stage supply meets demand so that we have a balanced market that is not skewed and is accessible. The market needs to be sustainable and there is still a lot of work to be done to ensure that it is. Figures like today’s stats from the CML can only help matters though.”

David Brown, commercial director of LSL Property Services, said: “Lending is creeping towards 2008 levels, but the market still has a long way to go before it fully recovers.

"House prices are already ahead of 2008 and the average first home is getting pricier. Real earnings are still around 2003 levels taking account of inflation. If house prices increase too quickly, deposits will become less affordable and more first-time buyers will be frozen out of the market. The government schemes are however no doubt helping FTBs with more to come in January next year when the final scheme launches.

“The rental market is picking up the slack that gap that still remains in house purchase volumes and one in five households could be living in private rented accommodation by the middle of the decade. Lower inflation and even slower rent rises have both been welcome news for first-time buyers this month. But with low interest rates and therefore no savings account offering a real return after tax and inflation, saving for a deposit looks set to remain challenging.”