Gross mortgage lending has hit its highest level since October 2008 as lenders advanced £14.7bn in May, Council of Mortgage Lenders figures show.
Lending is 21 per cent up on the £12.2bn lent in April and 17 per cent higher than the £12.6bn lent in May 2012.
CML chief economist Bob Pannell says: “Funding conditions, helped by the funding for lending scheme, continue to look favourable and are supporting more competitive mortgage pricing and availability and a gradual resumption of lenders’ risk appetite.
“While the direction of travel is clear and fits well with the more positive housing surveys from Royal Institution of Chartered Surveyors and others, our forward estimate does imply somewhat stronger house purchase activity than we had been expecting.
“This may reflect a degree of pent up sales following the extended spell of poor weather earlier this year.”
Moneysprite director Ashley Brown says: “The jitters have turned into a jog. The mortgage market is no longer walking, but running back to health.
“For mortgage lending to surge by more than a fifth in a month is the best news we have seen in years.”
London & Country mortgage specialist David Hollingworth says: “Funding for lending has helped boost competition so products have been improving in price. We saw a real turnaround at the start of the year and it is now feeding through to lending.”