The trade body said that total lending in the month hit £12.9bn, the biggest monthly figure this year and the largest since November 2011. This was a marked increase from the £11.39bn recorded the previous month.
CML chief economist Bob Pannell said that the government’s Funding for Lending Scheme was likely to be behind the rise in lending.
“House purchase and remortgage activity both appear to have picked up recently, and this should be supported by an improvement in the availability and pricing of mortgages.
“The Funding for Lending Scheme is likely to have made an early positive impact, helping to counter some of the negative pressures associated with a protracted and weak economic recovery.”
Dan McLeod, director of Atkinson McLeod estate agency, said that despite the boost to lending, most buyers without a significant deposit were still unable to obtain finance.
“Despite the apparent pick-up in October, the mortgage market today is little different to 12 months ago. Or 24 months ago. There is momentum and choice at lower loan-to-values, but higher LTV borrowers remain on extremely shaky ground.
“The first question we ask any prospective purchaser is this: what’s your deposit? If they’re above 85% LTV, you know they face an uphill struggle from day one.”
Mark Harris, chief executive of SPF Private Clients, added: “The lending market has certainly picked up in recent weeks, with a significant increase in the number of transactions being done, so it is no surprise that this is reflected in the October data.
“This bodes well for next year as we expect this easing to continue. As lenders saturate the low loan-to-value market with a plethora of rock-bottom rates, they will be forced to turn to the higher LTV bracket if they are going to do any significant levels of business, which will mean cheaper rates and more choice for first-time buyers in particular.
“We are already starting to see one or two lenders – most notably the Co-operative Bank with its two-year fix pegged at 3.99% for those with a 10 per cent deposit – offer cheaper rates at high LTVs.”
