Council of Mortgage Lenders says loans in July rose to 56,000 but warns full recovery is not imminent

The number of loans made to home buyers in July showed a year on year increase for the first time since early 2007.

Figures from the Council of Mortgage Lenders (CML) reveal the number of mortgage loans in July totalled 56,000, up 19% on the same month a year ago, and a 24% increase on June.

The CML said July's annual increase is the first "material" rise since February 2007 but CML chief economist Paul Samter warned it was too early to say the market had finally recovered.

Samter said: “There are still constraints affecting the lending industry's capacity to fund increased lending, as well as less consumer motivation to remortgage for the time being. The overall lending picture is likely to stay relatively subdued for some time, especially as the wider economy is far from robust as yet.”

Earlier Ernst & Young’s respected economic forecaster the Item Club warned that house prices are set to dip in the first half of 2010.

The Item Club said house prices would not return to peak 2007 levels until 2014 at the earliest.