According to the Council of Mortgage Lenders (CML), gross mortgage lending totalled an estimated £16bn in July, a +26% increase from £12.7bn in June but down -36% from £24.9bn in July 2008.

This is further evidence of a modest improvement in the market over the summer after an exceptionally weak winter. However, activity is still subdued on any historic comparison as this is the lowest July lending figure since 2001 and -£11bn lower than the July average over the previous seven years of £27bn. Lending volumes remain consistent with CML’s forecast for £145bn in gross mortgage lending this year.

Advances have picked up in June and July as anticipated. There is typically a strong seasonal rise over the summer months as a whole. The increase is likely to have been driven mainly by a rise in house purchase activity, rather than remortgaging activity, as low reversion rates continue to limit the attraction of refinancing.

In a statement, CML said: ‘Most of the indices point to house prices rising modestly over the summer months. The CML’s July gross lending estimate of £16bn is the highest level in nine months and consistent with the rise in house purchase approvals.

‘But the bounce-back in activity from the extreme weakness around the turn of the year, coinciding with a seasonal bounce, is limited in how far it can go against the current back-drop. We expect improved sentiment to support the market, but a further significant pick-up is unlikely with so many obstacles in place. As a result, we anticipate some seasonal slowing in lending volumes and housing transactions over the latter part of the year and the picture of a slow but more stable market to emerge.’