Mortgages and House Prices on the Up, Optimism? Afraid Not

The Council of Mortgage Lenders has revealed that the number of home purchase loans agreed in June this year was just 6% lower than in June last year. Also today the latest release of the government's house price index shows that house prices rose 1.6% in June, and 2.6% over the second quarter -- this following several monthly rises recorded by the government, Nationwide and Halifax indices this year.

But even CML are cautioning against being too positive about the currently positive data; the report said that the number of mortgages advanced for house purchase was less than half the average seen in June during the past seven years, while loans to first-time buyers remain about half the 30,000-plus taken out each month before the housing market downturn began.

CML economist Paul Samter said: "Low interest rates and realistic selling prices have helped generate a welcome increase in transactions. But there is some way to go before we reach normal levels of activity."

I am afraid that I am one of the big pessimists when it comes to the UK housing market," said Richard McKay of private property sales portal Zungalow.com.

"The banks are still fighting battles with their balance sheets; trying to make more money from fewer loans leaving them unable to provide affordable mortgages, and unemployment is still rising despite positive economic data at present. Until those two things change I can't see any kind of recovery, and don't get me started on affordability," he explained.