In a four-page CML newsletter Bob Pannell said the UK was a “long way” away from a boom and bust scenario but the improvements in house prices and mortgage approvals suggested that there may be some dangers on the horizon.
Data collated by the CML revealed that in June and July lending was 27 per cent higher than in the same period last year, and according to the Nationwide and Halifax indexes house prices also increased by 3.5 per cent and 5.4 per cent respectively.
The CML said that earlier in the year both indexes showed that prices were broadly the same as they were a year ago.
The newsletter stated that both the recovery in lending and the growth in house prices were recent developments, adding: “Housing and mortgage markets have shown some initial signs of recovery this summer, but commentary suggesting this improvement is an incipient boom is premature.”
Mr Pannell pointed out that “comparisons of longer-term trends show that the current recovery is so far following a pattern broadly similar to the extended period of improvement that we saw in the last cycle”.
The CML suggested that the current housing market cycle was following a pattern similar to that of the early 1990s when signs of recovery took a number of years to emerge.
According to the newsletter, the UK economy should benefit from “an expanded range of macro-prudential tools that potentially enables policymakers to continue to foster economic recovery, while containing activity in sectors showing signs of excessive buoyancy”.
David Hollingworth, head of communications for Somerset-based London and Country Mortgages, said: “The CML is saying ‘let’s not get carried away’ but we needed to see an improvement and things have definitely improved. Rates have become more attractive.”