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Responding to the latest Credit Conditions survey from the Bank of England, Paul Samter, economist for the CML, said the small increase in the availability of credit in the second quarter meant that lenders were likely to extend access to high LTV products and loan-to-income ratios.

The BoE's second quarter survey, conducted between 26 May and 12 June, revealed lower funding costs had increased the availability of secured credit to households.

This is the first increase since the third quarter of 2007, the BoE said.

However, Samter warned an increase in LTVs would not come from all lenders.

He said: "Unfortunately, however, not all lenders are in the same position. Some of the increase in capacity is due to commitments made by some large lenders signing up to the asset protection scheme.

"But there has been a significant loss of capacity across other parts of the industry, which is unlikely to return in the short term. While there are some encouraging signs, a rapid return to pre-credit crunch lending volumes and products remains extremely unlikely."

The report also found that demand for secured lending for house purchase had increased over the last three months while demand for secured lending for remortgaging declined further.

Lenders expected that demand for secured lending would remain broadly unchanged over the next three months.

Default rates on lending to households and to private non-financial corporations rose over last three months, with lenders expecting a further increase in both default rates and losses given default.