Month-on-month gross mortgage lending increased by 16% to £12.8 billion in June, the highest monthly increase since July 2010, according to the CML.
In the second quarter of this year, a total of £33.5 billion was advanced to residential property buyers, an 11% increase on quarter one. However, that figure is still 3% lower than the corresponding quarter last year.
The CML says the housing market has been buoyed by demand from buy to let landlords, and this is expected to continue over the coming months. However, it also expects to see more repossessions and higher arrears in the second half of this year.
Howard Archer, the chief economist at IHS Global Insight, said the figures do not indicate that the housing market will pick up significantly over the summer. Historically, June is a better month than May, he added.
He also pointed out that the number of properties coming on to the market would determine house prices, as well as the availability of contractor mortgages, interest rates and the effects of the fiscal squeeze.
Meanwhile, despite the debt crisis in the euro zone, mortgage lenders are continuing to cut the cost of fixed rate loans. The latest lender to cut rates is Nationwide, which says it is reducing the rate on two year and three year fixes by up to 0.3%.
There appears to be renewed competition amongst mortgage lenders as they try to meet their lending targets. As the market is still relatively subdued, they need to compete harder on price. Fixed rate products are now at all-time lows mainly because the fear of an interest rate rise has receded.
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