Mortgage lending for house purchase showed its first significant annual increase since early 2007 during July, figures have revealed.
The number of mortgages lent to people buying a home were 19% higher than in July 2008, while they jumped by 24% compared with June this year to 56,000, according to the Council of Mortgage Lenders.
The group described the increase as being significant, but warned that it may not be sustained due to the ongoing problems affecting the mortgage market.
CML economist Paul Samter said: "It's tempting to call the turn in the mortgage market at this point, and there is certainly concrete evidence that lending for house purchase is increasing. But there are still constraints affecting the lending industry's capacity to fund increased lending, as well as less consumer motivation to remortgage for the time being.
"The overall lending picture is likely to stay relatively subdued for some time, especially as the wider economy is far from robust as yet."
The housing market has shown signs of stabilising in recent months, with most house price indexes reporting price rises, but economists have warned that the ongoing problems in the mortgage market, as well as rising unemployment, could trigger a fresh round of price falls.
Total mortgage advances, including money lent to people remortgaging, rose significantly for the second month in a row to £14.5 billion, although this was still 42% lower than in July last year.
Within the total, £7.5 billion was lent to people buying a home, with just £4.7 billion going to those remortgaging, and the rest accounted for by buy-to-let lending and equity release.
First-time buyers continued to return to the market, with their numbers rising by 18% compared with the previous month to 20,400 - the sixth consecutive increase and the highest number since December 2007. But for the sixth month running people buying their first home with a mortgage put down an average deposit of 25% of their property's value, reflecting the hefty deposits lenders continue to demand.
First-time buyers are now borrowing around 3.02 times their annual pay, down from an income multiple of 3.27 12 months earlier. Former owner-occupiers borrowed an average of only 66% of their property's value, the lowest level since August 2004, while the proportion of income they spent on mortgage interest dropped to 11.1%, also the lowest level for five years and well down on the 17% they spent on interest in July last year.