Spike in lending, but it's not over yet

Mortgage lending improved during the month of June, according to the Council of Mortgage Lenders (CML).

Their figures showed that gross lending to both house buyers and people re-mortgaging homes increased by 15 percent to £13.1bn.

This is seven percent higher than the same time last year, and also the biggest monthly figure of 2010.

But potential home buyers shouldn’t be too enthused just yet, as June’s increase was merely a seasonal pick-up, with overall lending remaining subdued, CML warned.

They believe there are signs house prices are stabilising, with more properties being put up for sale thanks to the recent abolition of Home Information Packs. Consequently, liquidity in the market may increase.

However, transaction levels are likely to remain flat as long as access to credit remains problematic, while expected job losses in the public sector will also provide further damage, the UK trade body added.

Elsewhere, the bleak outlook was reflected by comments from the Bank of England in the latest edition of its monthly publication.

The Bank revealed major lenders in the UK expect demand for secured lending to be flat for the rest of 2010, a reflection of potential buyers weak confidence in the property market.