Mortgage lending rebounded in July, lenders say

Total mortgage lending bounced back in July, according to the Council of Mortgage Lenders (CML).

Lending to house buyers and people remortgaging rose by 8% from June to the highest monthly level this year of £12.7bn, with the figure up 2% from the same month last year.

However, the CML warned that the figures should be treated cautiously.

It said that behind the monthly "see-saw" pattern of lending, the housing market was still "broadly flat".

"Interpretation of recent trends continues to be challenged by one-off effects," said Caroline Purdey of the CML.

"We look forward to the September figures when the distorting effects of the Diamond Jubilee and the Olympics should largely have worked their way through."

Lenders have imposed strict rationing on borrowers since the banking crisis was at its height in 2008.

As a result, new borrowers typically have to put down deposits of at least 20%, a requirement which has helped to halve the average monthly level of house sales in the UK, compared with the years running up to 2008.

Mark Harris, of mortgage broker SPF Private Clients, said any real recovery in lending was still "a long way off".

"The focus on the Olympics, the continuing eurozone crisis and weak consumer confidence is likely to result in a slight drop-off in transactions over the next couple of months," he said.

"However, the Funding for Lending scheme should deliver more competitive mortgage rates in coming weeks and these are already filtering through."

Ashley Brown, of mortgage broker, Moneysprite, said: "Until lenders start lending consistently at higher loan to values, the mortgage - and subsequently property - markets are destined to cruise.

"For the property market to regain any kind of traction, we need to see lenders target borrowers with smaller deposits, or less equity, far more aggressively, but the will to do so simply isn't there."

At the start of August, the Bank of England began its new scheme called Funding for Lending.

It is offering ultra-cheap funds to banks and building societies, on condition that the money is then lent on to personal and commercial borrowers.

The main aim is to boost lending to non-financial businesses in what the Bank has called "the real economy".

But it is widely expected also to give a boost to mortgage lending.

"While it's too early to estimate the direct impact of the "Funding for Lending" scheme on the mortgage market, we have noted a broadly positive reaction from banks and mortgage lenders," the CML said.

There is an 18-month window in which funds can be borrowed from the Bank, with the money lent for up to four years.

Separately, the property website Rightmove reported that new sellers cut their average asking prices this month by 2.4%, after a 1.7% cut in July.

"This is the largest monthly fall Rightmove has ever recorded in the month of August," the firm said.

"Sellers who come to market in the middle of the summer holiday season often have an urgent reason to sell and traditionally set their asking prices aggressively lower, though 2.4% is a substantial drop compared to the average fall of 1.1%."