Mortgage lending was up two per cent in September compared to the previous month, according to the latest figures from the Council of Mortgage Lenders.

Gross mortgage lending in September totalled an estimated £12.5billion, up from £12.3billion in August which saw a five per cent decline on July’s figures, suggesting that the mortgage market has not stabilised yet.

September’s lending is down 27 per cent on last September, the CML figures show, and the third quarter was down 36 per cent on the same period last year, but it was 18 per cent higher than the second quarter of 2009, showing some improvement.

The CML stressed that behind the modest improvement there are underlying factors to consider, such as the types of mortgage lending, because while house purchase activity increased 29 per cent in August compared to the same time last year, this is being off-set by a decline in remortgage lending.

CML economist Paul Samter comments: “House buying activity is running at considerably higher levels than around the turn of the year. 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 there are some positive signs to look to,” he added. “While the retail side, both in terms of mortgage and savings activity, has thrown up few surprises, it is encouraging that the wholesale markets have begun to thaw. Some of the UK’s highly rated institutions have been able to issue structured finance products backed by mortgages in recent weeks. This is only an early sign of wholesale investors tentatively coming back into the new issuance market, but is welcome nonetheless.”

© Fair Investment Company Ltd