Having declined during the early months of 2014 approval volumes also increased in June and approvals for purchase were up 12% year-on-year.
However remortgage approvals continued to slow and were down 8% on June last year.
Outside the property sector, annual growth in business borrowing continued to improve, with credit expansion now being seen in Manufacturing, Wholesale and Retail sectors.
But James Meekings, co-founder of Funding Circle, said there is still a long way to go before a full recovery.
He said: “There is still a long road ahead to a full recovery in small business lending. Far too many firms still cannot access the finance they need, and high streets banks aren’t in a position to cater for that demand on their own.
“Peer-to-peer lending has surged to fill the void left by the slide in high street lending to businesses. It is already a £1bn industry, providing the diversity and innovation that our dysfunctional financial system so badly needs.
“Online marketplace technology has the potential to build a financial world that works better for small businesses and investors.”
