The figures released by the Council of Mortgage Lenders show that there were 24,300 house purchase loans worth £3.1 billion in February compared with 23,400 loans worth £3.1 billion in January, an increase of 4% increase.
But the organisation, whose members undertake around 98% of all residential mortgage lending in the UK, points out that historically activity remains very weak, running at around one-third of the average February total of 76,000 loans for house purchase between 2002 and 2007.
The figures also show that re-mortgaging declined steeply in February. They fell 20% with some 35,000 loans agreed compared with 44,000 in January.
'We expect demand for remortgaging to remain muted as lenders' standard variable rates are attractive compared to new mortgage pricing, and house price falls continue to erode equity levels which will exclude some borrowers from the best remortgaging deals available to those with large deposits,' the CML said.
Again, although lending to first time buyers, a section that is regarded as being the key to resurrecting the property market, increased by 7% with 9,400 loans approved this is still significantly down on the 17,400 loans approved in February 2008.
'Tight lending criteria remains a barrier to most first-time buyers. First-time buyers typically had a deposit of 25% in February, a new record. Such amounts remain out of reach for all but the most affluent buyers, for example people returning to home ownership after a period of renting, divorcees, or those who get financial assistance from their family,' the CML added.
However, overall the CML says there are signs that point to improvements for the property market later this year but it calls upon the Government to announce further measures in the forthcoming Budget to encourage the sector.
'Some large banks are making more funding available through enhanced lending commitments, which is helpful but will not satisfy consumer borrowing demand on its own. We need further market measures to be introduced by the government around the Budget to encourage a mortgage market where all types of lenders – banks, building societies and specialist lenders, and large and small businesses – are encouraged, and enabled, to commit more funds to the mortgage market if we are to enhance lending activity significantly,' said director general Michael Coogan.