The Council of Mortgage Lenders’ latest monthly estimate showed that lending has reached levels not seen since October 2008, when the figure stood at £18.6bn.
In a slew of positive statistics released last week, the CML also revealed that lending was 29 per cent higher than the £12.9bn figure published for July last year.
Caroline Purdey, market and data analyst at the CML, said: “An improvement in sentiment and activity continues to show in the UK housing and mortgage markets, with a more positive picture also starting to emerge in the economy.
“Our forward estimate of gross mortgage lending in July reinforces a growing evidence base of a strengthening in the housing and mortgage markets.”
But David Brown, commercial director of LSL Property Services, said the market had “a long way to go” before it returned to full health. Mr Brown said: “House prices are already ahead of 2008 and the average first home is getting pricier. Real earnings are still around 2003 levels, taking into account inflation.
“If house prices increase too quickly, deposits will become less affordable and more first-time buyers will be frozen out of the market.”
Ben Thompson, managing director of the Legal & General Mortgage Club, said that encouraging data showed that the “only way is up” for the housing market.
He added: “Following government stimulus, we have now seen increasing house prices, much needed plans in place to increase the number of homes being built in the UK, and now these positive figures.”
Brian Murphy, head of lending at national firm Mortgage Advice Bureau, said: “The mortgage market is certainly ripe for picking, with the best choice of products and deals seen for years. Investing time in weighing up the options can really pay off in the long term.”