Despite mortgage lending increasing by 2% in the last month, the gross lending level is still down 27% compared to September last year, latest figures have shown.
The Council of Mortgage Lenders (CML) estimated that £12.5bn was advanced to hopeful homeowners in the last month, a 2% on mortgage lending levels from August this year. The CML believe that while the miniscule increase highlights signs of an improving market, the lack of remortgages occurring around the country means the improvement will remain "modest".
"House buying activity is running at considerably higher levels than around the turn of the year," said CML Economist Paul Samter.
"However, it remains weak on any historic comparison and is unlikely to rise much further given the constraints the lending community faces and a still difficult economic backdrop."
But a crackdown on mortgage lending criteria, recently proposed by the Financial Services Authority (FSA), has also been criticised for further complicating the lending process for buyers.
New lending criteria questions will ask homebuyers how much of their revenue they spend on luxuries, such as drinking and smoking, in an effort to sure up the lending market. But the move has been criticised by Andrew Montlake, Director of independent mortgage broker Coreco.
"It is ironic that, on the one hand the government is trying to force lenders to lend more, and on the other hand is planning to make it harder for them to do just that."
