But lending was 3% lower than in June 2010

Mortgage lending hit its highest monthly total since July last year, according to the Council of Mortgage Lenders.

The CML’s figures showed the amount lent rose 16% from May to June 2011 reaching £12.6bn.

However lending was 3% lower in June 2011 compared with the same month a year earlier.

The total amount lent in the second quarter of 2011 was £33.5bn, an 11% increase on the first three months of the year and 3% down on the second quarter of 2010.

CML chief economist Bob Pannell said slow economic growth, strong consumer price inflation, falling disposable incomes and uncertainty in the employment market were putting people off home ownership. He added: “By contrast, landlord activity appears to have picked up recently and, with evidence of strong rental demand, this should help to underpin activity over the coming months.”

He said household debt had fallen but this was largely because of falls in mortgage lending, write-offs of unsecured debt and some income growth. “Households in aggregate are not repaying their mortgage debt more quickly,” he said.

He said arrears and repossessions were expected to grow in the second half of 2011 and into 2012 but predicted low interest rates would mean repossessions would not increase as much as had been feared.