Gross mortgage lending in June reached £13.1 billion, a 15% increase from £11.4 billion in May and a 7% increase from £12.2 billion in June last year, said the Council of Mortgage Lenders.
Gross lending in the second quarter of 2010 was an estimated £35 billion, up 17% from the first quarter of this year (£30 billion) and up 7% from the second quarter of 2009 (£32.7 billion). Lending in the first half of 2010 remained unchanged from the first half of 2009 (£65 billion).
CML economist Paul Samter said the improvement in June was seasonal but despite being higher than June 2009, the gross figure for last month was still historically low.
He added: “There are signs of house prices stabilising and more properties coming onto the market following the abolition of home information packs. This may improve liquidity in the market, but transaction levels are subdued and likely to remain so while access to credit remains constrained.
“The FSA has outlined a clear direction of travel as part of its mortgage market review. The consultation paper on responsible lending increases the regulatory burden on lenders and could make it harder for borrowers to access credit.”
Brian Murphy, head of lending at broker Mortgage Advice Bureau, said the uplift in June may not point to continued improvement for the remainder of the year. He said: "The levels of lending in the first half of 2010 are roughly the same as 2009 but whereas in the second half of 2009 the market had a boost with the end of the stamp duty holiday incentivising people to jump in and buy, there is no such incentive for buyers in the second half of 2010.
"On the contrary, with looming public sector cuts, taxation rises, a freeze on wage increases and inflationary pressures, we are likely to see lending tail off during the second half of 2010, with buyers likely to take a wait-and-see approach. There's every chance that mortgage lending this year will be below the level of lending in 2009."
Jonathan Samuels, chief executive at Drawbridge Finance, agrees with Murphy that the mortgage market is on a knife edge. He added: "Mortgage lending may be up slightly, primarily due to seasonal factors, but in the short-term both the mortgage and property markets remain delicately poised.
"Ever-increasing supply and falling demand, driven largely by difficulties securing mortgage finance, could place downward pressure on prices in the months ahead. There is a considerable financing shortfall that is unlikely to be made up for some time yet.”
