Net lending, which does not take into account redemptions and repayments, rose
by £1bn last month. The increase, which follows on from homeowners repaying
£203m more than was advanced during July, was well above the previous six month
average of £0.6m.

The number of house purchase approvals stood at 52,317 in August, a slight decrease
from July’s figure of 52,404. Further optimism on lending was enhanced by the Q2 Credit Conditions Survey from the BoE, which revealed that lenders expect to increase funds and credit availability over the final quarter of 2009.

David Brown, commercial director of LSL Property Services, said it believed the figures
showed confidence was flowing back to the housing market.

He added: “The statistics suggest that lenders are freeing up capital and lending more. If lending continues to be positive for the next few months, transactions should increase and this should aid a recovery and boost the wider economy.”

Simon Rubinsohn, chief economist at Royal Institution of Chartered Surveyors (RICS), said it was reassured that the negative net lending figures recorded in July proved to

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be a one-off, but it feared that limited lending would restrict further improvement.

He added: “The steady approvals and increased lending suggest that mortgage
demand has grown, but we believe the scarcity of mortgage finance and the lack of
properties on the market will mean buyers will struggle to get a mortgage which will
hinder a recovery.”

David Hollingworth, head of communications at L&C, agreed that the figures were too inconsistent to believe that an upward market trend was occurring.

He explained: “I can see prices rising and falling over the coming months. Activity has
improved, but any recovery will be limited by tight credit conditions.

“We need to take it one month at a time and not get carried away. The figures are
moving in the right direction, but they are a mixed bag and very little should be read
into them.”