House prices up 0.8pc

House prices increased by 0.8% in July compared to a 0.3% rise in June and are now some 3.9% higher than they were in June last year.

Robert Gardner, chief economist at Nationwide, said: "Signs of a modest improvement in wider economic conditions and further modest gains in employment are likely to be lifting buyer sentiment.

"An improvement in the availability and a reduction in the cost of credit, partly as a result of policy measures such as the Funding for Lending and Help to Buy schemes, are also boosting the demand for homes."

Brian Murphy, head of lending at Mortgage Advice Bureau, added: “The pace of house price rises continued to pick up in July, with Nationwide reporting the strongest rate of annual growth in nearly three years.

“Thankfully for borrowers, mortgage rates are continuing to drop with similar speed. The latest rapid round of rate cuts has seen fixed rate deals fall as low as 1.49% which is new and unchartered territory.

“Government action has certainly affected the mortgage market: Funding for Lending celebrated its one year anniversary this week, while the Help to Buy scheme is continuing to attract interest from lenders and borrowers.

“With house prices likely to rise in the second half of the year, now is the time for any homebuyer who can afford a deposit to spring into action.”